An analysis of annual reports from the UK’s biggest companies reveals that almost all of them — 90% — will only work with suppliers who share their ESG credentials, while another 3% are integrating those requirements this year.
The analysis by OneStream, a corporate performance management platform, found that ahead of new sustainability reporting requirements set to come online in the EU, some UK sectors are bigger ESG sticklers than others. Among companies in the retail, energy and consumer goods sectors, 100% of companies expect their suppliers to align with their ESG commitments, while finance (90%) and insurance (85%) close behind.
The pre-condition for ESG affiliation is equally high for companies with headquarters both within and outside the UK (88%). In addition, the top 10 companies ranked by employee size all require their suppliers to report their ESG metrics, while nine of the top 10 companies ranked by market value expect ESG metrics to be met.
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These findings stand in stark contrast with the fraught political landscape in the U.S. for ESG efforts.
“We’ve seen a significant shift in public opinion towards ESG concerns, with shareholders, regulators and customers all exerting pressure on the UK’s largest companies to establish and deliver clear ESG commitments,” said Matt Rodgers, OneStream’s EMEA general manager. “In response, these firms are now pushing the ESG message down their supply chains by requesting evidence from suppliers of their ESG commitments as part of the tendering process.”
Among the information required by FTSE 100 companies, prospective suppliers are required to disclose various of commitments to improving their ESG targets, including their adherence to proper human rights practices, commitment to reducing their carbon impact and encouraging diversity in the workplace.