State of ESG 2023: Where to Play and How to Win

The four main ESG challenges to prepare for in 2023
State of ESG 2023: Where to Play and How to Win
Publ. date 9 Dec 2022
Based on recent developments and insights from its annual ESG Market Survey completed by 160+ European stock listed companies, Finch & Beak's State of ESG 2023 Report outlines four main ESG challenges surfacing in today's dynamic business environment. For companies looking to increase the effectiveness of their sustainability programs and for corporate decision makers looking to prioritize their budgetary limitations, the report suggests how to avoid the ESG reporting trap, leverage TCFD, engage your board better, and improve the insights into your supply chain, while also reflecting on the freshly released Dow Jones Sustainability Index 2022 results.

In the summer of 2022, Finch & Beak conducted its annual ESG Market Survey to understand how companies are approaching ESG ratings, the challenges they face, and the tools that companies utilize to activate a successful sustainability program. This served as a follow-up on the 2021 research to evaluate changes in the ESG activation landscape.

The survey was conducted in July 2022 with a target audience consisting of a group of 1,563 European-headquartered companies who were invited to participate in S&P Global’s Corporate Sustainability Assessment (CSA). 166 responses were gathered from a wide range of professionals responsible for sustainability, investor relations, or corporate communications within their companies.

Four challenges of the State of ESG 2023

In addition to reflecting on the freshly released Dow Jones Sustainability Index 2022 results,  the report discusses four distinct challenges for companies looking to increase the effectiveness of their sustainability programs and for corporate decision makers looking to prioritize their budgetary limitations:

1. The ESG Reporting Trap is Alive and Kicking

39% of surveyed companies indicated they are responding to six or more ESG benchmarks, and 75% identified collecting ESG data as one of the main challenges of implementing their sustainability strategy. While progress is being made, the ongoing lack of standardization and regulation of ESG ratings leaves sustainability departments struggling with the workload to respond to these requests and still be able to generate substantial impact.

To avoid the ESG reporting trap, the attached report explains how to evaluate ratings’ richness & reach to prioritize efforts and consolidate the insights from ratings to improve the company’s ESG performance.

2. Leveraging TCFD: Looking at Risk and Opportunity

Despite climate change arguably being businesses most material impact, only 23% of the ESG Market Survey respondents reported that their company fully embedded the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) into its public reporting. Moreover, the opportunities from the trend toward decarbonization are still much undervalued.

With increasing scrutiny on climate-related issues, companies have no other choice than to accelerate their climate strategies and leverage TCFD. In fact, TCFD compliance will no longer be voluntary for most European companies, as there already is a legal requirement to report in alignment with TCFD in the United Kingdom, and a close alignment is forthcoming between TCFD and the recently approved Corporate Sustainability Reporting Directive (CSRD). The report highlights how to effectively do so using the TCFD roadmap, and presents a case study of leveraging climate opportunities in the telecommunications industry.

3. Engaging Your Board 2.0

Boardroom awareness of sustainability is –finally– on the rise. Only 13% of survey respondents identified convincing board members of the relevance of sustainability as a major challenge for the implementation of the sustainability program.

However, engagement with boards is now requiring a fundamentally different approach, as ESG is expanding board members’ fiduciary and accountability duties in their role as stewards of the company’s long-term success. The report suggests how to realize board engagement 2.0, by specifically training board members on sustainability, closely involving senior leaders in ESG strategy development, and formalizing sustainability governance from shopfloor to boardroom.

4. Increased Scope of Company Boundaries

The biggest implementation challenge for companies, by a mile, is collecting and managing ESG data across value chains. This challenge was cited as the prime roadblock by 75 percent of respondents to the ESG Market Survey, an increase of 7 percentage points from the year prior. The added challenge is that legal decrees such as the EU Directive on Corporate Sustainability Due Diligence are extending corporate responsibility towards the value chain. Therefore, assuming the social and environmental responsibilities stop at one’s own backyard is no longer a voluntary consideration.

Expanding toward a value chain approach requires increased transparency, engagement, and improvements in supplier performance, but this comes with its own challenges. The report suggests specific actions on how to better collect and manage supply chain insights. This is illustrated by the case of LyondellBasell applying digital product passports to track precise information about a product’s components and environmental impact as it moves through the value chain.

Interested in knowing more about the State of ESG 2023?

Download the full report available at the top of this article and join our ESG Acceleration Webinar on 13 December 2022 to know more about the State of ESG 2023 and better understand where to play and how to win in ESG in 2023.

If you would like to discuss your company’s own ESG challenges, and how to accelerate your company’s performance in this context, get in touch with Johana Schlotter, at or call +31 6 28 02 18 80 to discuss how Finch & Beak can support you.

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