1. ESG impacts on business practices. Over the last several years, ESG has grown from a buzzword to a core aspect of corporate strategy around the world. ESG considerations have become more important in investment decisions, asset valuation, and risk assessments. It is also changing how businesses operate, with studies finding that companies with robust ESG practices see greater profits and better employee retention. ESG has pushed companies to be more transparent with their data and disclosures. One of the greatest obstacles of ESG is standardisation with hundreds of reporting and disclosure frameworks to navigate. However, the International Sustainability Standards Board hopes to address this with the introduction of the IFRS S1 and S2 reporting standards.
2. Well-being economies: A new way forward. The Wellbeing Economy Governments (WEGo) partnership consists of New Zealand, Iceland, Finland, Wales, and most recently Scotland. Members of this partnership have the shared goal of developing economies “designed to serve people and the planet rather than the other way around”. Well-being economies prioritise environmental conservation, population health and financial equity over profit unlike the neoliberal capitalist economics of the 21st century. While this is primarily a government-led initiative at the moment, companies can implement similar practices internally and focus on employee well-being, fair wages, and minimising environmental damage within their operations.
3. Working with governments for concrete climate action. As ESG and sustainability continues to be a high priority in businesses around the world, organisations are setting ambitious targets. While this is a good start, very few companies have actually taken any action to achieve them as the largest companies have continued emitting at similar levels since 2018. With legislation either signed into law or on the horizon in the United States, United Kingdom, and Europe, companies need to move quickly to avoid being caught flat footed. Despite setting climate targets, many companies are also still actively lobbying against climate legislation such as Meta fighting back against California’s Climate Corporate Data Accountability Act. This causes reputational damage with the public when the resources spent on lobbying could be redirected to ensuring they are in compliance with future legislation. Companies should engage in public policy and advocate for climate action rather than fighting it, such as Patagonia.
4. BlackRock moving away from E and S proposals. Support for ESG resolutions from BlackRock shareholders has dropped from 2022 to 2023. In 2021, the largest asset manager in the world supported almost half of all ESG proposals, dropping to 21% in 2022. Support in the United States for environmental and social resolutions specifically dropped from 25% to 15% in the last year. This year, the firm only approved 9% of all proposals. BlackRock cited “the poor quality of many shareholder proposals” as the primary reason for this significant drop.
5. What would happen if polluters were forced to pay? A study published in Science analysed the emissions of 15,000 public companies and found that if they were forced to pay for every ton of carbon they emitted, it would cost trillions of dollars. This would cause immense losses in profit, with the cost of damages far higher than profits for high polluting industries such as materials, oil and gas, and transportation. The researchers behind this paper also found that mandatory emissions disclosures would drive emission reductions. There is real world evidence of this from fracking companies who reduced environmental contamination following mandatory pollution disclosures. Governments in Europe, the United Kingdom, and the United States have implemented or are considering mandatory disclosure regulations. Find the full journal article in Science here.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.
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