- Exploring the Future Five Years from Now: Many Are Upbeat on ESG, Expecting Positive Business Performance
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Exploring the Future Five Years from Now: Many Are Upbeat on ESG, Expecting Positive Business Performance
The COVID-19 pandemic has brought about great changes in society and the business environment. To grasp the nature of the transformation arising from this ongoing event, since May 2020 Nikkei BP has been conducting a series of surveys of Japanese businesspeople (more than 11,000 in total). The results reveal major shifts in their mindsets.
This article looks at the current state of corporate initiatives in ESG investment and how they are associated with the business performance of companies. Analysis was performed using survey data from "Research on the Future in the Next Five Years: Corporate investment/expectations for carbon neutrality," which was conducted in January 2021. ESG investment is defined as investment in companies making efforts with awareness of the three ESG fields--Environment, Social and Governance. The scale of ESG investment has been expanding, propelled by international promotion of the SDGs (Sustainable Development Goals).
The survey asked respondents whether the companies they manage or work for will promote corporate initiatives for ESG investment in the future (Fig. 1). Those who answered either "We are already working on the initiative and it will progress" or "We plan to work on the initiative and it will progress" accounted for approximately 50% of the respondents. They can be seen as comprising a "positive group" that is aggressively working on ESG-related issues. Meanwhile, less than 20% replied either "We are already working on the initiative but it will not progress" or "We plan to work on the initiative but it will not progress." The results revealed that most businesspeople have a positive view of the ESG-related initiatives being conducted or planned by their companies.
The survey also asked respondents about the business performance outlooks of their companies for FY2021 compared with FY2020. About 30% of the replies were accounted for by each of the answers stating that performance would be positive ("Very good" or "Good)," "Unchanged," or negative ("Very bad" or "Bad"). This suggests that the nature of business recovery would be mixed due to the effects from the COVID-19 pandemic. Analyzing the expected business performance for FY2021 and the current conditions of ESG investment efforts, respondents having an optimistic view of ESG investment tended to expect that their companies' business performance would be positive (Fig. 2).
About 40% of the respondents in the "positive group" (those who answered either "We are already working on the initiative and it will progress" or "We plan to work on the initiative and it will progress") expected that their business performance for FY2021 would be positive ("Very good" or "Good"). Only 20%, or half of the respondents having a positive view of ESG investment, foresaw that their business performance would be negative ("Very bad" or "Bad"). On the other hand, more than 40% of the respondents who did not expect progress in ESG investment initiatives assumed that the business performance of their companies would be negative, and less than 20% of them believed that their business performance would be positive.
The survey respondents were mainly corporate executives, and the results showed that more corporate owners and managers had an optimistic view of their companies' ESG investment initiatives. Respondents with a positive view of ESG investment also seemed to have a strong tendency to see a bright future for the business performance of their companies.
This report was compiled by Tomoko Ueno, Future Business Research Team, Nikkei BP Intelligence Group.
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