CSE Research Shows Strong Link Between ESG Practices and Profitability in FT 500 Companies

The Centre for Sustainability and Excellence (CSE) has released the results of its annual research on environmental, social, and governance (ESG) ratings and reporting trends. The research, which examined the ESG practices and commitments of over 400 FT 500 companies in North America and Europe from 31 sectors, found that there is a strong link between financial performance, brand credibility, and ESG best practices. The 25 companies with the highest percentage increase in profits between 2020 and 2021, including General Mills, Ford, NIKE, Target, and AIG, all had high average consolidated ratings on four ESG ratings, used ESG-related standards, incorporated stakeholder concerns and preferences into their strategies, had comprehensive independent ESG reporting, and were committed to ambitious quantitative goals.

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The research also found that while many companies have set ambitious goals, there is still a lack of transparency, with 29% of companies validating near-term reduction targets and almost 50% setting net-zero targets. It is unclear whether these goals are honest aims, wishful thinking or greenwashing. Additionally, the research found that while 86% of the companies evaluated had published an accessible, independent sustainability (ESG) report, only 30% had external assurance. This highlights the need for companies to increase transparency and accountability in their ESG practices to ensure that their actions align with their goals and commitments.