Financial services lag behind in social impact initiatives, finds Kearney Index of Social Performance

News provided by

Sep 20, 2023, 07:37 ET

Financial services receives lowest social maturity score in new Kearney index
73% of companies support social impact initiatives with monetary support, but only 49% offer pro bono services

LONDON, Sept. 20, 2023 /PRNewswire/ -- Global management consultancy Kearney today publishes its inaugural Index of Social Performance, which measures the social maturity of companies, based on three social impact dimensions:

Strategy – the thoughtfulness and effectives off the processes used to select social projects
Operating model – how well the projects are planned and carried out
Performance – the different forms of impact that are measured and how accurately this is tracked

Average weighted KISP score per industry. Source: Kearney analysis

By combining these scores, the Kearney index reveals which industries are leading the pack in conducting effective social impact initiatives and which are laggards, needing significant improvement.

Financial services firms have work to do

When comparing social maturity, the Kearney index found that financial services companies scored an average of 62.6 points out of 100, the lowest of all surveyed industries. This may be a result of the higher-than-average cost of compliance and risk management in this sector, or a particular focus on the environmental factor of ESG over social initiatives.

Regardless of the reason, business leaders in financial services must act decisively to improve, or risk losing momentum with increasingly socially-conscious consumers.

In comparison, with an average weighted score of 71.4 against the average of 68.3, the health industry was the clear leader in social maturity, potentially due to being people-oriented by its nature.

However, as only 48% of companies in all sectors surveyed reported having a dedicated social impact team, there is still significant room for improvement even at this top level.

Social impact in an echo chamber?

Despite the importance of working with external partners to effectively execute social projects, over two-thirds of companies (68%) implement their social projects entirely with their own resources. Less than a quarter of global companies (22%) partner with an NGO to manage initiatives. This leads to a knowledge gap in companies' social initiatives and may also prevent companies from pursuing high-impact projects that are beyond their capabilities.

The study also found that leading companies use their own expertise to prompt change rather than relying on financial donations: 73% of companies surveyed support social initiatives with monetary support, but only 49% offer pro bono services.

Nerea Aragonés, Global Sustainability Director at Kearney, comments:

"ESG has become a core part of most companies' development strategies and reporting processes over the last couple of decades. However social impact has often trailed behind environmental impact as a priority – particularly in financial services – and the time is right for this to change.

"Working with external partners is essential to accelerate progress, create significant measurable impact, and ensure more regenerative business practices for the future."

Beth Bovis, Partner at Kearney, comments:

"With 48% of companies surveyed having a dedicated social impact team, there is certainly a growing focus on social impact, but our research overwhelmingly shows that many companies are still looking for the most effective way to navigate this less-travelled part of the environmental, social and governance map.

"A successful social impact strategy must be collaborative, bold and lead from the top, but companies trailing behind still have plenty of time to make the changes that can have a huge impact."

To access the report, click here.

Methodology

This inaugural study of organizations' efforts to manage the social part of their ESG agendas was conducted in April and May of 2023. Because of the resources that ESG requires, only companies above $500 million in revenue were included.

Kearney gathered data from 602 companies, representing six major industries in 17 countries. Included were Australia, Brazil, Canada, China, Colombia, France, Germany, Indonesia, India, Italy, Mexico, Nordics (Denmark, Finland, Norway and Sweden) South Africa, Spain, the United Arab Emirates, United Kingdom, the United States.

To access the report, click here.

About Kearney

Kearney is a leading global management consulting firm. For nearly 100 years, we have been a trusted advisor to C-suites, government bodies, and nonprofit organizations. Our people make us who we are. Driven to be the difference between a big idea and making it happen. We work alongside our clients to regenerate their businesses to create a future that works for everyone. Learn more at http://www.kearney.com.

U.S. Media contact:

Meir Kahtan
MKPR
[email protected]
+1 917-864-0800

SOURCE Kearney