BDO: One in five Scottish businesses have declined work over ESG concerns

BDO: One in five Scottish businesses have declined work over ESG concerns

Chris Meyrick

Business leaders in Scotland are voting with their feet and declining to work with clients because of their ESG credentials, but at a much lower level than across the rest of the UK, according to new research from accountancy and business advisory firm BDO.

BDO’s ‘Rethinking the economy’ survey found that 18% of businesses in Scotland 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, 55% selected ED&I performance. The second most important consideration from 21% of businesses is the reputation of potential customers or suppliers with external stakeholders including the media. Personal relationships was also cited by one in ten companies.

In regard to diversity and inclusion, improving social mobility and socio-economic diversity is a key priority for a 38% of businesses. This compares to 23% of businesses that are prioritising environmental commitments as part of their ESG agenda.

Chris Meyrick, partner at BDO in Scotland commented: “It is a difficult time to be doing business, as we continue to battle with the after-effects of the pandemic, geopolitical uncertainty and overbearing the cost-of-living crisis, but some business leaders are still focused on ensuring they are doing the right thing when it comes to ESG and are prepared to walk away from business, as a result.

“However, Scotland lags the national average with only 18% of businesses revealing that they are already declining to work with clients due to poor ESG performance compared to 43% nationally and reaching levels over 50% in areas such as the Thames Valley or Yorkshire.

“While all businesses will need to be prioritising ESG no matter what their size or sector in years to come, these results may be indicative of Scottish businesses facing disproportionate challenges to those elsewhere and the fact they simply can’t walk away from this revenue or their procurement process doesn’t yet factor this in.”

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. We know the UK has low social mobility and more businesses focusing on this issue will be key to creating more equal opportunity across the board while also boosting business over the long-term.”

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