RSM survey shows mid-market companies accelerate adoption of ESG activities and reports

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CHICAGO, October 14, 2021 / PRNewswire / – The growing importance of environmental, social, and governance (ESG) issues has reached an inflection point in the mid-market, as many more executives of these companies report being familiar with ESG and embracing formal ESG plans, according to the RSM. US Middle Market Business (MMBI) Special ESG Report released today by RSM US LLP (“RSM”) in partnership with the US Chamber of Commerce. In Q3 2021, 69% of mid-market executives said they were very or somewhat familiar with using ESG criteria to assess performance, which is an increase of 30 percentage points from 39% in Q4 2019.

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Mid-market companies are also taking action, as 66% of respondents who are aware of ESG and support these causes said their organization has formal plans regarding commitments to ESG initiatives. Of these respondents, 32% indicated that environmental issues were a cause included in these plans, making it the most important issue included in the survey.

“It is in the economic interest of the US economy in general – and in the commercial interest of middle market companies in particular – that the integration of ESG practices into their core operations becomes essential,” said Joe brusuelas, Chief Economist of RSM US LLP. “Organizations can no longer wait and hope for the best. They need to act decisively and prepare for a different regulatory framework while shaping market demands in the future. “

The report’s findings also indicate that large mid-market companies ($ 50 million To $ 1 billion in annual turnover) are ahead of small organizations ($ 10 million To $ 50 million in annual sales) in terms of ESG familiarity, adoption of formal plans and use of ESG criteria to assess performance.

Responding to environmental concerns presents business opportunities
Further illustrating their commitment to ESG initiatives, almost half of respondents (48%) said their organization was taking action to reduce its net carbon emissions to zero or had already reduced those emissions to zero. Examined by size cohort, this figure was 66% for large mid-market firms and 23% for small firms.

Overall, 20% of respondents said climate change presents significant opportunities over the next three years and 28% of respondents said climate change presents significant challenges, while 27% said that ‘it presents both important opportunities and challenges.

RSM’s analysis indicates that a clear commitment to ESG can help companies stand out and attract talent. In terms of improving their ability to attract and retain workers, 58% and 57% of respondents, respectively, said that climate change presents opportunities, now or in the future, to some extent or to some extent. large measure.

“The pressure to support ESG initiatives is increasing from various stakeholders including customers, employees, industry peers and regulators,” said Anthony DeCandido, Partner and Senior Financial Services Analyst at RSM US LLP. “As such, we expect plans to take on even greater importance in business operations and have a greater impact on financial performance. These plans have proven to be good for businesses and society in general. “

Increased emphasis on reporting indicates that ESG is no longer a “good to have”
RSM’s survey results show that the use of indicators to measure success around ESG goals has increased over the past two years, indicating that ESG is emerging as a central pillar nested in all business operations. Among those surveyed whose organizations are aware of ESG and support such causes, the proportion who said their companies use ESG metrics to a large extent to assess their performance rose to 36% in Q3 2021, from 26% in the fourth quarter of 2019.

Of those surveyed who said they use ESG to a lesser extent, to some extent, or to a large extent to assess performance, 77% said their organization provides external reports on ESG performance, and 65% either attempt or attempted to assess the wider potential impact that achieving ESG objectives has on the environment or society. Sixty-six percent said their organizations have dedicated senior executives whose primary responsibilities include establishing and delivering ESG visions.

Other ESG initiatives included in the ESG plans of middle market organizations
While environmental issues lead the way among a diverse list of ESG issues and causes, fair trade and / or procurement, community health and wellness, and education support initiatives were the options. more important that executives say they include in their ESG plans. Other causes included gender equity, support for the LGBTQ community, and racial justice.

Among respondents somewhat familiar or very familiar with ESGs, 78% said they include diversity and inclusion policies in the initiatives they report on externally, 59% said they include pay gap initiatives in ethnicity in these reports and 55% include information on gender pay gap initiatives.

“Organizations that wish to further develop their ESG framework should consider performing a company assessment to see where its ESG priorities are,” said DeCandido. “While the initial investment can be intimidating, the price of ignoring ESG requirements far outweighs the cost of implementing a strategy around these issues. Executives who feel overwhelmed by the scale of ESG issues and how to solve them may want to start with focus, short-term goals that can help build momentum. “

The survey data that informs this reading of the index has been collected between July 8 and July 26, 2021.

About the RSM US Middle Market Business Index
RSM US LLP and the United States Chamber of Commerce have teamed up to present the RSM US Middle Market Business Index (MMBI). It is based on research of middle market companies conducted by Harris Poll, which began in the first quarter of 2015. The survey is conducted four times a year, during the first month of each quarter: January, April, July and October . The survey panel consists of 700 middle market executives and is designed to accurately reflect middle market conditions.

Built in conjunction with Moody’s Analytics, the MMBI grew out of the survey question subset that asks respondents to report change in a variety of metrics. Respondents are required to answer a total of 20 questions modeled on those from other qualitative business surveys, such as those from the Institute of Supply Management and the National Federation of Independent Businesses.

The 20 questions are about changes in various measures of their business, such as income, profit, capital expenditure, hiring, compensation of employees, prices paid, prices received, and inventory. There are also questions related to the economy and prospects, as well as the availability of credit and borrowing. For 10 of the questions, respondents are asked to report the change from the previous quarter; for the other 10, they are asked to indicate the probable direction of these same indicators six months in advance.

The answers to each question are reported in the form of diffusion indices. The MMBI is a composite index calculated as an equal weighted sum of the diffusion indices for 10 survey questions plus 100 to prevent the MMBI from going negative. A reading above 100 for the MMBI indicates that the middle market is generally expanding; less than 100 indicates that it is generally contracting. The distance of 100 indicates the strength of the expansion or contraction.

About the United States Chamber of Commerce
The United States Chamber of Commerce is the world’s largest trade organization representing businesses of all sizes in all sectors of the economy. Membership ranges from small businesses and local chambers of commerce that line America’s main streets to major industry associations and large corporations.

They all share one thing: they rely on the United States House to be their voice in Washington, across the country and around the world. For over 100 years, we’ve advocated for business-friendly policies that help businesses create jobs and grow our economy.

About RSM US LLP
RSM’s goal is to provide the power to be understood to our clients, colleagues and communities through world-class auditing, tax and advisory services focused on mid-market companies. The customers we serve are the engine of global trade and economic growth, and we are focused on developing leading professionals and services to meet their ever-changing needs in the ever-changing business environment of today.

RSM US LLP is the US member of RSM International, a global network of independent auditing, tax and advisory firms with 48,000 people in 120 countries. For more information visit rsmus.com, like us on facebook, follow us onTwitterand / or connect with us on LinkedIn.

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