Behind the ESG headlines - March 18, 2022

By mathew-loup

Environmental, social and governance (ESG) risks and reporting, as well as the ongoing appalling effects of Russia’s war on Ukraine, feature heavily in our latest round-up of articles, blogs, reports or videos.

1. UBS is the latest major company to tie pay to ESG goals. Its top executives must now meet certain sustainability goals tied to the company’s climate roadmap towards achieving net zero. ESG performance is not just for senior leaders. The performance award pool across the company links to UBS’ sustainability priorities, including diversity, equity and inclusion, health, education, wealth inequality and climate change. UBS wants to reach net zero in its operations by 2025, net-zero emissions from its primary vendors by 2035, and attain net zero in all areas by 2050. 

2. Proxy season is underway, and Apple is the first major company to come under the ESG microscope by shareholders. Two new proposals were approved at Apple’s March 4 annual meeting. The first asked the board to conduct a third-party civil rights audit of the company. This would then be publicly disclosed on Apple’s website. The second is for a public report “assessing the potential risks to the company associated with the use of concealment clauses [in employment agreements] in the context of harassment, discrimination, and other unlawful acts”. The same reports on concealment clauses have been conducted at Facebook, Amazon, IBM and Alphabet. 

3. WWF has published its guidance for financial regulators on disclosures related to climate change risk. WWF believes that standard sets of disclosure principles and reporting templates are needed. Otherwise, any risk analysis will be “unreliable, difficult to understand, and impossible to compare. Without such standards, climate risks cannot be adequately priced in by financial markets or consistently considered in financing decisions.”

4. European banks are falling short in their transparency around disclosing climate risks. That’s the conclusion of the latest report from the European Central Bank, which says that not a single bank is fully meeting supervisory expectations. Supervisory assessment of institutions’ climate related and environmental risks disclosures reveals that 75% of banks fail to disclose at all whether climate change risks have any material impact on their business. 

5. As national governments rush to dust down previously shelved fossil fuels projects due to the war in Ukraine, it’s clear that climate change risks are taking a back seat to “energy security”. For example, Norway has provided 53 new licences for drilling in the North Sea, while the UK is opening a brand new oilfield. Even before Russia invaded Ukraine, the United Nations Environment Programme reported that “governments’ production plans and projections would lead to about 240% more coal, 57% more oil, and 71% more gas in 2030”. Increased stakeholder activism may be the only solution: the Norwegian government is being taken to court by environmental activists. Watch this space.
Mathew Loup is Competent Boards’ Director, Marketing & Communications. Connect with him on LinkedIn.

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