Business leaders in the Midlands are voting with their feet and declining to work with clients because of their ESG credentials, according to new research from accountancy and business advisory firm, BDO.
BDO’s ‘Rethinking the Economy’ survey found that 42% of businesses in the region are declining or discontinuing to work with clients or customers as a direct result of their ESG performance.
When asked which factors business leaders considered most important when selecting or renewing contracts with customers or suppliers, 33% selected ED&I performance. The second most important consideration from 23% of businesses is the reputation of potential customers or suppliers with external stakeholders, including the media. Personal relationships ranked as the third most important, which was cited by 20% of companies.
In regard to diversity and inclusion, improving social mobility and socio-economic diversity is a key priority for more than a quarter of businesses. The same proportion are focusing on diversity and inclusion relating to ethnicity and 28% are focused on gender diversity and inclusion. This mirrors the 27% of companies that are focusing on environmental commitments.
Tim Foster, partner at BDO, said: “Business leaders are facing pressure from every angle at the moment, whether it’s the cost-of-living crisis, the lingering effects of a global pandemic, or geopolitical uncertainty. Despite this, businesses are clearly voting with their feet when it comes to weighing up commercial relationships and the ESG agenda.
“With almost half of businesses revealing that they are already declining to work with clients due to poor ESG performance, all businesses will need to be prioritising ESG no matter what their size or sector.”
He added: “It is positive to see such a high percentage prioritising diversity and inclusion around social mobility and ethnicity within their leadership teams and workforces. Improving social mobility in the Midlands is key to the future success of the region, and businesses will play a vital role in driving that agenda forward to create more equal opportunities across the board.”
