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Behind the ESG headlines - May 13, 2022
Leadership is not done in the dark. Information and insight illuminate the best companies’ decision-making every day. In the modern business world, environmental, social and governance (ESG) risks and opportunities provide the gray hairs and moments of delight.
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1. Pressure at the top. Sustainability is climbing corporate agendas everywhere, with CEOs fast realizing it is a key driver of future growth. That’s according to a new study by IBM’s Institute for Business Value. More than 3,000 CEOs around the worldwide took part in Own your own impact: Practical pathways to transformational sustainability. Sustainability (51%), Regulation (50%) and Cyber risk (45%) are the top three organizational challenges, with supply-chain disruption (38%) and geopolitical uncertainty (35%) two other areas that have gained far more attention than in 2021. Lack of data insights, unclear ROI and technology barriers are the main stumbling blocks for progress, say CEOs.
2. Green ambition. New Zealand has set out its goals for the road to net-zero emissions by 2050. To address the multiple challenges of climate change, the country plans to encourage electric vehicles, phase out coal-fired boilers in hospitals, industry and schools and partner with farmers on how to reduce methane emissions from the millions of sheep and cows. The greenhouse-gas reduction plan will be backed by three emissions budgets, which will act as legal stepping stones to 2050.
3. Directors in demand. Board members with sustainability and cybersecurity expertise are hot commodities for boards, according to the latest Board Monitor Global report from Heidrick & Struggles. The report covers the Fortune 500 companies. In the past year, the number of directors with sustainability expertise has risen from 6% to 14%, while those with cybersecurity knowhow has grown from 8% to 17%. Although the rate of growth is positive, there is still a long way to go. Nominating and governance committees everywhere are searching high and low for board members with strong backgrounds in ESG issues, sustainability, and information security.
4. True transparency. Loblaw has issued its 2021 ESG report, detailing progress on current commitments and putting down new markers for the future. Plus points for the year gone by include meeting initial targets for women in management roles and investing US$1 million in plastic research. Loblaw has now set its sights on achieving net-zero emissions for Scope 1 and 2 by 2040, and net-zero emissions for Scope 3 by 2050. The retail giant also aims to make all in-store plastic packaging recyclable or reusable by 2025 and publish a climate-risk assessment report, based on the Task Force on Climate-Related Financial Disclosures (TCFD).
5. Leadership changes. A new survey by PwC has revealed an accelerating demand for Chief Sustainability Officers (CSOs) in the UK. With ESG and sustainability high on many companies’ agendas, more than one in three (37%) major organizations now have a CSO. France (57%), the USA (47%) and India (44%) top the charts. The irony is that if more firms hire CSOs and ESG knowledge spreads at board and senior leadership levels, then the specialist CSOs could make themselves redundant.
Mathew Loup is Competent Boards’ Director, Marketing & Communications. Connect with him on LinkedIn.BACK TO NEWS & VIEWS