Organisations struggle managing ESG despite growing importance

ESG and sustainability remain weak areas in reputation management.

Sandpiper’s Global Reputation Capital Index 2024 has highlighted that ESG and sustainability continue to be the weakest areas of reputation management for organisations worldwide. 

Despite global ambitions to combat climate change, only 9% of companies fall into the leading category for ESG performance, indicating that many are still grappling with this aspect of their reputation.

Kelly Johnston, Chief Operating Officer of Sandpiper, explained, “Reputation is becoming something that is more difficult to manage. Organisations these days are expected to be more transparent and open and engaged with their audiences than ever before, while also having to navigate far more channels… and some of those channels are also being manipulated by technology.” Johnston added. 

The report found that while 98% of global leaders recognise the importance of reputation to commercial success, over half (56%) of them are struggling to manage it effectively. ESG and sustainability, in particular, are relatively newer areas of focus for many companies, which explains some of the difficulties they face in this realm. 

“ESG and sustainability action… should have started many more decades before it, in fact, has in reality,” Johnston said. She acknowledged that while progress is finally being made, it has only been in the last five to ten years that substantial action has been taken.

Johnston pointed out that many organisations are still trying to find their footing when it comes to integrating ESG into their overall governance structures. Companies are also grappling with how to operationalise ESG and sustainability efforts, while still balancing the demands of shareholders, investors, and profitability. 

“There’s no doubt that this can create value… but it would come when it comes down to actually taking action. Your numbers fall away vastly,” Johnston remarked, stressing the gap between recognition of ESG's importance and the execution of these strategies.