Business leaders in Yorkshire 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 55% 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, a fifth selected ED&I performance. Other important considerations include the reputation of potential customers or suppliers with external stakeholders, including the media (35%), and the geographical proximity of suppliers (20%).

In terms of diversity and inclusion, improving social mobility and socio-economic diversity is a key priority for nearly a third of businesses. The same proportion are focusing on diversity and inclusion relating to ethnicity, as well as on gender diversity and inclusion. This mirrors the 35% of companies that are focusing on environmental commitments.

Terry Jones, partner and head of BDO in Yorkshire and Humber, commented:
“The task of running a business at the present time is extremely challenging for regional leaders, as they contend with factors such as the cost-of-living crisis, the lingering effects of a global pandemic, and geopolitical uncertainty. However, despite the considerable pressures facing Yorkshire businesses, they are clearly voting with their feet when it comes to weighing up commercial relationships and the ESG agenda.

“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 diversity and inclusion around social mobility and ethnicity within their leadership teams and workforces featuring strongly on the list of priorities. 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.