ESG Parameters: These two words symbolize a global priority, intertwining environmental, social, and governance factors that shape organizations’ commitments to a sustainable future.

The 2024 Global ESG Monitor by SEC Newgate, now in its fourth edition, highlights a significant gap between the public’s expectations and the actual efforts of governments and businesses in addressing ESG issues. Surveying over 14,300 people across 14 countries, including Italy, the study paints a complex picture: while ESG criteria are viewed as fundamental, many remain disappointed with the progress made so far.

What are ESG parameters, and why are they important?

ESG—short for Environmental, Social, and Governance—encompasses a set of criteria used to evaluate companies based on their sustainability practices, ethical conduct, and transparency.

In an era where sustainability is front and center, each ESG component plays a pivotal role in reflecting an organization’s commitment to responsible operations. This growing focus has led both the public and investors to demand greater accountability on issues such as climate change, social equity, and corporate governance.

  • Environmental: Addressing climate change, resource efficiency, and pollution reduction.
  • Social: Emphasizing employee well-being, community impact, and diversity.
  • Governance: Ensuring ethical leadership, compliance, and transparency.

Additionally, the rise of AI technologies and the emergence of ESG-focused roles, such as sustainability analysts and ESG data specialists, have strengthened companies’ abilities to evaluate and enhance their ESG performance.

Regulations, such as EU Directive 2464/2022 and Italy’s Model 231, are further driving a shift towards ethical and transparent corporate cultures, pushing organizations to meet stringent ESG standards.

Public Expectations of Governments and Businesses

The Global ESG Monitor 2024 reveals that public expectations for ESG are exceedingly high. Globally, 58% of respondents rated the importance of ESG themes as 9 or 10 out of 10, with 55% of Italians echoing this sentiment.

However, trust in governments and large corporations lags behind these expectations. Only 50% of respondents globally gave these institutions a score of 7 or above for their ESG efforts, with SMEs facing even harsher criticism, particularly in Italy.

ESG and Profitability: A Win-Win Scenario

Contrary to the belief that sustainability hinders profitability, 73% of respondents globally and 72% in Italy agree that improving ESG outcomes does not necessarily come at the expense of financial performance. This indicates a shift in public perception, recognizing that long-term value creation and sustainable practices can coexist.

Transparency and Trust: The Greenwashing Challenge

Despite widespread interest in ESG, skepticism persists. Globally, 44% of respondents—and 40% in Italy—doubt the truthfulness of corporate ESG claims, largely due to greenwashing incidents and vague disclosures.

To combat this, the Corporate Sustainability Reporting Directive (CSRD) has introduced stricter transparency requirements for European companies, mandating detailed sustainability reports aligned with international standards.

The Italian Perspective: Challenges and Opportunities

In Italy, 78% of respondents express interest in ESG topics. However, only 17% fully understand its meaning—a stark contrast to the 54% global average. This knowledge gap, combined with concerns over healthcare, working conditions, and the cost of living, fuels skepticism.

Despite these challenges, Italians remain aware of the need for sustainable progress and demand greater corporate social responsibility.

ESG Impact on Investments: Growing Focus on Sustainability

The 2024 ESG Monitor also explores how ESG factors influence investment decisions. Globally, 49% of investors are willing to divest from companies that fail to meet ESG standards, with 42% of Italian investors showing the same resolve. Italy ranks among Europe’s most ESG-conscious countries, signaling a promising trend toward responsible investing.

Building Trust Through Transparency

The 2024 Global ESG Monitor underscores the need for stronger actions and transparent communication from businesses and governments to meet public expectations. Sustainability reports, now essential tools, can demonstrate genuine ESG commitments and foster trust among stakeholders.

For the future, collaboration between governments and companies is vital to address global challenges effectively. By embracing innovative strategies and prioritizing transparency, organizations can meet ESG expectations and build a more equitable, sustainable world for future generations.