The United Nations’ Sustainable Development Goals (SDG) are a key aspect of corporate ESG. They were first announced in 2015 with the aim of all 17 goals to be achieved by 2030. However, research by Clarity AI has found that SDG funds are not making significant impacts in countries that struggle the most with sustainable development. Only 1% of the goods and services supplied by companies that are members of SDG funds are sold in developing countries that need such investments the most. Additionally, ¾ of these companies’ revenues come from high SDG index countries, so most of the money is flowing to countries that already have strong SDG performances. Asset managers and investors must analyse where their funds are going to make sure they are having the greatest positive impact.
2030 is an important year as many corporations and governments around the world have set targets for the end of this decade. Our world-class Global Competent Boards ESG and Climate & Biodiversity programs will help participants navigate such targets to ensure that their companies are on track.
1. IOSCO supports regulatory adoption of new IFRS frameworks. The International Organization of Securities Commissions (IOSCO) has endorsed the International Foundation for Reporting Standards (IFRS) sustainability and climate reporting frameworks. IOSCO has put out a statement to its member jurisdictions, which regulate 95% of the world’s financial markets, calling for them to include them in regulatory standards. The organisation has shared that the new standards “are appropriate to serve as a global framework for capital markets to develop the use of sustainability-related financial information.” This is an important step towards universal reporting standardisation and a strong vote of confidence for the newly launched standards.
2. The Australian government faces a climate and biodiversity lawsuit. Last week Jubilee Australia, an organisation focused on addressing human rights and environmental issues, sued Export Finance Australia (EFA) and the Northern Australia Infrastructure Facility (NAIF). EFA is a branch of the Australian federal government that manages Australia’s export credits, and NAIF is an infrastructure fund for investments in northern Australia. Jubilee Australia argues that both government agencies use taxpayer dollars to fund oil and gas projects without appropriate environmental disclosures and transparency. The organisation argues that the public is unaware that the government is involved in environmentally damaging activities. The two agencies have “given over a billion dollars to some of the most polluting fossil fuel projects in the world”.
3. SEC considering new rules to manage artificial intelligence risk. Last week Gary Gensler, Chairman of the United States Securities and Exchange Commission (SEC), made a speech about the growing risk AI brings to stock exchanges and markets around the world. Gensler shared that while there are many benefits to AI, investors must ensure it does not impact the already fragile financial system. He also believes it could “encourage herding behaviour among investors”, as market participants being informed and guided by AI increases the risk of them making similar financial decisions. To avoid market destabilisation, Gensler has directed staff to develop proposals to address the issues arising from increased AI usage while still allowing firms to use AI to their benefit.
4. Are engineers the missing link on corporate boards? Digitalisation and technology developments are happening at breakneck speeds due to the hard work of engineers around the world. These technologies have played a huge role in driving corporate profits and success. A study found that 85% of the United States’ GDP growth in the last 50 years can be attributed to developments in science and technology. However, fewer than 40% of companies listed on the Fortune 100 had an engineer on their board and 14% had none. 60% of companies had no board members with a degree in physics, chemistry, or mathematics. Even if your organisation is not in the technology business, every company around the world relies heavily on digital technology. The skillset and technological prowess of engineers and STEM graduates is also undeniable and can lend credibility to board proceedings.
5. Unions concerned over increased AI utilisation. Unions around North America from the International Longshore and Warehouse Workers union to the Writers Guild of America and actors in SAG-AFTRA are striking, and AI is a significant issue. Dock workers are concerned about the use of robots powered by artificial intelligence in ports replacing the work of union members. Writers are concerned that their work will be replaced by AI generated scripts that studios can produce at a fraction of the cost. Striking actors want protections to prevent AI from using their likenesses without their consent and without appropriate compensation. These concerns are not unique to these industries, as AI could potentially replace millions of jobs in the coming years. To avoid strike action, employers can consider acting proactively to put protections for their workers in place as these strikes are devastating to the economy.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.