• Half of North West businesses report that they have declined to work with clients because of their ESG performance, above the national average of 43%

• A third of business leaders within the region are prioritising the socio-economic equality, diversity and inclusion (ED&I) of their workforce and executive team as part of their ESG agenda

• Less than a fifth are prioritising environmental commitments

Business leaders in the North West are voting with their feet and declining to work with clients because of their ESG credentials, according to new research from accountancy and business advisory firm, BDO.

BDO’s ‘Rethinking the economy’ survey found that 50% of businesses in the region 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, 37% selected ED&I performance. The second most important consideration from 20% of businesses is the reputation of potential customers or suppliers with external stakeholders including the media. Personal relationships was also cited by a fifth of companies.

In regard to diversity and inclusion, improving social mobility and socio-economic diversity is a key priority for a third of businesses. A similar proportion are focusing on diversity and inclusion relating to ethnicity and 10% are focused on gender diversity and inclusion. This compares to less than a fifth (16%) of businesses that are prioritising environmental commitments as part of their ESG agenda.

Ed Dwan, partner at BDO commented:

“It is an incredibly difficult time to be doing business, as we continue to battle with the after-effects of the pandemic, geopolitical uncertainty and the cost-of-living crisis, but 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.

“With almost half of businesses revealing that they are already declining to work with clients due to poor ESG performance, all businesses will need to be prioritising ESG no matter what their size or sector.”

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.”