85% of Organizations Have Eliminated a Potential Technology Supplier Due to ESG Concerns
NEWTON, Mass., Oct. 6, 2022 /PRNewswire-PRWeb/ -- Enterprise Strategy Group, a leading IT analyst, research, and strategy firm, and a division of TechTarget, Inc., today announced new research into the relevance of environmental, social, and governance (ESG) programs in IT purchase decisions. The study reveals a clear indication that vendors serious about selling to today's corporate and government buyers should invest in robust ESG programs and messaging. ESG initiatives represent an organization's commitment to social responsibility based on sustainable and ethical practices and policies.
The new report, The Role of ESG Programs in IT Decision Making, summarizes a survey of 400 IT professionals involved in IT product and service purchase decisions. This survey revealed that IT suppliers' ESG compliance programs matter to IT buyers, and failure to maintain these initiatives could eliminate vendors from consideration by business customers. ESG programs ranked as a top five assessment criterion for vendor shortlist inclusion, and a majority of firms admitted to eliminating suppliers due to ESG initiative shortfalls.
The motivations for ESG analysis vary by organization—from the altruism of reducing carbon footprints and promoting social equity, to pressure from customers, peer organizations, and even employees to attain ESG compliance. This research also found that assessment processes for suppliers' ESG programs are still developing, but some clear trends are emerging for tech vendors to consider:
- An overwhelming 93% of IT decision makers expect technology suppliers' ESG commitment to increase in importance. IT sellers and marketers should support investments in ESG programs as these will increase win rates, all other things being equal.
- 58% of respondents believe that ESG compliance information at the company level, as opposed to the product or service level, is more valuable. Vendors seeking to enhance their brand and transactions with buyers need to display their ESG information in multiple formats and locations.
- In general, IT buyers scrutinize equipment providers for environmental factors, while service and software providers are examined more rigorously from the governance perspective. Vendors should invest in and highlight the attributes that are most likely to have a positive impact on buyer perception.
- 66% of respondents said they use the Sustainability Accounting Standards Board (SASB) framework when evaluating ESG supplier programs, making it the most popular benchmark. However, a variety of frameworks were frequently referenced. Suppliers need to cast a wide net across ratings agencies, independent and in-house content development efforts, and marketing communications.
"The consensus is clearly that ESG is increasing in importance to IT organizations and their purchasing decisions. In fact, the majority of surveyed firms intend to purchase commercial ESG software and services to automate the assessment process in the next two years," said TechTarget Market Insight Executive Jon Brown. "IT suppliers have little time left to work on the integrity of their ESG programs, and all vendors should prepare their marketing efforts and selling cycles for more scrutiny in this area." For more information on this new research, please visit the Enterprise Strategy Group website.
About Enterprise Strategy Group
TechTarget's Enterprise Strategy Group is an integrated technology analysis, research, and strategy firm providing market intelligence, actionable insight, and go-to-market content services to the global technology community. It is increasingly recognized as one of the world's leading analyst firms in helping technology vendors make strategic decisions across their go-to-market programs through factual, peer-based research. The firm is a division of TechTarget, Inc. (Nasdaq: TTGT), the global leader in purchase intent-driven marketing and sales services focused on delivering business impact for enterprise technology companies.
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