If your business isn't trimming budgets in preparation for one of the most-anticipated recessions in recent memory, you're likely taking other precautions to position yourself for a rough 2023.
Nearly three-quarters of CEOs expect global economic growth to decline over the next 12 months, while 52 percent report reducing operating costs, according to PwC, which surveyed more than 4,400 executives during October and November.
When looking for line items to cut, many companies start with sustainability efforts and diversity programs.
Fifty-nine percent of U.S. CEOs told the accounting firm KPMG they planned to pause or reconsider their company's environmental, social, and governance (ESG) programs in the coming months, even though 70 percent said those efforts improved financial performance.
That poses a problem for mission-driven entrepreneurs like Nancy Geenen.
In 2019, Geenen, who is a lawyer by trade, founded the equity and inclusion consulting firm Flexability, whose clients include both small businesses and public companies like American Express.
Demand for Flexability's services spiked after the murder of George Floyd in 2020 and the social justice protests that followed. But recently, Geenen started receiving calls from clients saying they didn't have the budget this year and would have to scale back.
Though Geenen is concerned about losing business, she says what's most concerning is companies treating the issue of equity at work as an expense rather than an investment.
Rob Holzer has started to observe a similar downtick in business recently at Matter Unlimited, which he founded in 2010 after working at marketing and advertising agencies.
The New York-based strategic and creative consultancy works specifically with mission-driven organizations on ESG strategy and impact campaigns. Even with an enviable roster of clients like Nike and the Obama Foundation and a record year for revenue in 2022, Holzer has still felt some sting of a slowdown.
Regardless of whether a recession materializes, business owners working in the ESG and impact space know that companies still face pressure to show results when it comes to issues like equity, diversity, and sustainability, whether that pressure comes from investors, customers, or their own employees.
For some clients, addressing their company's environmental impact is not something they opt out of, regardless of the economic climate. Tim Greiner, the co-founder and managing director of sustainability consulting firm Pure Strategies, says he has yet to see any significant reduction in corporate sustainability budgets.
Still, like any other business owner, Greiner has prepared for a downturn by focusing on cash flow, marketing to find new clients, and being extra careful with every hire Pure Strategies makes. For cost conscious clients, the team also recommends putting more of the onus on suppliers when it comes to sustainability.
Despite any reductions in corporate ESG budgets, founders in the sector are remaining focused on the long-term, because they are confident business will not only return but grow.
Source: Inc. website
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