For the avoidance of doubt, ESG remains a key issue in the boardroom-but now we are seeing evidence of a little less hype exaggerating its importance.
For example, back in August 2023, celebrated asset manager BlackRock reported a further decline in its support for shareholder resolutions on environmental and social themes. At the time, it cited corporate progress on the areas and poor crafting of the measures by filers.
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Specifically, BlackRock said it supported 7% of 399 shareholder proposals on environmental and social issues. That was down from 22% of 321 of such measures in the previous cycle and 47% of 172 of them the year before.
Meantime, consumer behaviour in banking and payments is not notably any more influenced by ESG considerations than it has historically.
ESG considerations have not yet impacted retail banking market share
ESG evangelists have a regular habit of simply ignoring any inconvenient fact that does not suit their agenda. The blunt truth is that consumers do not switch banks, in material numbers, for ESG/ethical considerations.
If UK consumers did so behave, ethical lenders such as Coop and Triodos would be making notable market share gains. Spoiler alert-they are not.
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By GlobalDataGlobalData has been making the point very clearly, since 2023, that the significance of ESG has been overhyped.
Moreover, GlobalData’s own executive survey data suggests very few bank employees actually expect ESG to have a big impact on bank strategy.
Across the 18+ sectors GD covers in the survey, Banking & Payments executives were last out of all of them based on agreement with the statement “ESG will have a significant impact on your business in 2023”. And even across industries – i.e. the aggregated responses – out of the top six strategic priorities in last two years, ESG had dropped from 2nd (in 2021) to last (in 2023).
Steve Walker, senior banking analyst at GlobalData tells me: “I’d go even further. Two years of being forced-fed ethical/ESG is leading to consumer resentment / backlash.”
GlobalData Financial Services Consumer Survey 2024
And then last year, GlobalData’s Financial Services Consumer Survey 2024 shows that, globally, 57.1% of all consumers who invest prefer to receive the highest returns possible over investing companies with ESG considerations. This figure is even higher in the US, with 61.6% of consumers preferring maximum returns.
Further data from GlobalData’s Competitor Benchmarking Analytics reveals that 79% of consumers are satisfied with their main bank’s ESG approach.
The GlobalData ESG research is discussed in more detail in this analyst note, published this week by Jonathan Vaughan Burleigh.
For the record, there remains a stream of research, trying to puff up the importance of ESG. Take one such example this month from global payments platform Ecommpay. It reported that, an implausibly high 61% of e-commerce merchants would ‘definitely’ choose a payment provider based on their commitment to ESG. A further 38% said they might do so. The sustainability values of a potential partner have at least some influence over all respondents; 41% said they are strongly influenced, and 53% somewhat.
I am surprised the report saw the light of day. And I may of course be wrong. But my strong suspicion is that price and service are and will remain the key considerations, not ESG commitments.
Payments Association data suggests that just 5% of payments businesses see ESG as a priority in the next 12 months. That is not just a gap between the priorities of payment providers and their clients – it is a chasm.
Of the two pieces of contrasting research, I’d respectfully suggest that the Payments Association numbers are a tad more realistic than the research released by Ecommpay.
GlobalData Tech Sentiment Polls
And now, GlobalData research reveals that ESG issues have nosedived as a priority for businesses as other global and macro matters continue to cause concern.
GlobalData’s Tech Sentiment Polls Q4 2024 report found both that the proportion of respondents who feel that ESG is the theme that will most impact their business in the next 12 months is at one of its lowest points for at least three years and that ESG ranks at its lowest-equal compared to other themes over the same period.
None of that comes as a surprise. Nor is it a surprise that leading US banks have pulled out of the Net Zero Banking Alliance. It would however be a welcome change if some of the ESG hype was a little less exaggerated. Such a reset in the language of the ESG PR is overdue.
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