UK business are growing increasingly concerned over the level of data they will be required to supply to meet the demands of regulators around Environmental Social Governance (ESG).
Audit tax and advisory firm Mazars has issued its C-Suite Barometer, and while there was rising optimism from UK business leaders challenges still remain.
The barometer found 90% of respondents are predicting a positive growth outlook for 2023, despite ongoing economic volatility. This follows on from success in the last year, with 87% reporting they saw an overall increase in revenue from 2021 to 2022.
In the short term Mazars’ research found there are a number of external challenges which UK business leaders believe will have an impact over the next year and are having to mitigate. The key trends expected to have the biggest impact are:
- economic trends including inflation and higher cost of living (37%)
- energy prices and/or shortages (35%)
- emergence of new technologies (33%)
Almost nine in ten (87%) of the UK C-Suite expect their organisation’s energy costs to increase in 2023 – 11 points more than among the global C-Suite – and 37% do not expect these costs to drop before 2024. To help combat the impact of this on their businesses, two in five (40%) UK business leaders have moved some employees to remote working, with 27% planning to do the same in the next 12 months. In addition, more than a third (35%) say they have introduced company-wide efficiency plans.
The drive to sustainability is seen as a major issue for business and while there is some confidence the weight of regulation is a concern.
Mazars found the majority of the UK C-Suite feel well prepared for new ESG reporting requirements, with 75% of organisations currently producing a sustainability report, ten points higher than organisations globally. Over a third (37%) say they are completely ready to meet new requirements, with 33% being mostly ready. Three quarters (73%) have also already budgeted costs to implement their ESG strategy and reporting.
For more than half (53%) of UK businesses that produce a sustainability report, data quality is the biggest challenge when producing this – notably more than global businesses, with 37% saying this is their main challenge.
Mark Kennedy partner and member of the Group Executive Board at Mazars explained: “UK businesses are understandably prioritising new technologies and sustainability investment in the next three to five years. Transforming technology is the number one strategic priority for businesses, with automation and AI both key areas of focus. There’s a high level of confidence in data protection and businesses’ ability to handle cyber risks, but with attacks increasing and becoming more sophisticated, it’s crucial they don’t fall into a fall sense of security.
“Looking at ESG, the UK looks to be ahead of its global peers when it comes to producing sustainability reports. However, UK business leaders note a higher concern for data quality. Addressing this will be key to the reliability and credibility of reporting, which could be an important differentiator for UK businesses.”
For over a third (35%) of UK executives, transforming company IT/technology is the top strategic priority over the coming three to five years, and 33% believe the emergence of new tech will have the biggest impact on their business in the next 12 months alone. Three in ten (30%) say it’s essential to understand and exploit automation, with a further 62% thinking this is important. 77% feel it’s important to capitalise on AI, with an additional 18% thinking this is essential.
There is also a high level of confidence around managing technological risk among UK C-Suites. Two thirds (65%) are confident in their level of data protection. Half (50%) believe the cyber risk has increased in the last year, but a strong majority (94%) are confident they can manage these risks.
Kennedy added: “Despite a volatile economic context, it’s encouraging that business optimism remains high for this year among UK business leaders. There are of course several external issues causing some concern. The issues businesses are most worried about cannot be controlled directly, which could therefore mean that leaders switch to a more tactical mindset, focussing on short-term responses with longer-term investment requirements such as technological transformation and sustainable development falling down the priority list. However, this could prove to be detrimental in the mid- to longer-term. With uncertainty expected to be the norm for the foreseeable future, businesses need to retain a focus on their own longer term sustainability by investing wisely now.”