Behind the ESG headlines - September 23, 2022

By mathew-loup

Nature or nurture? Biodiversity loss is increasingly becoming a topic of interest for board directors and senior business executives around the world. 

A new McKinsey report looked at where Fortune 500 companies stood on the nature crisis. Although 83% have targets related to climate change, only 20% have anything for chemical and plastic pollution, while biodiversity loss was a target for a mere 5%. 

There is a clear knowledge gap emerging on this topic, but it forms part of the wider spectrum of environmental, social and governance (ESG) risks and opportunities that all companies must face.

But here comes the cavalry! You can start to get up to speed with our new condensed ESG Lite program or really immerse yourself for six months in our world class ESG or climate-change education via our Designation and Certificate programs.

  1. Human-rights issues. Just under 50 million people around the world still live under conditions of modern slavery, according to a new report. That chilling figure has risen by 10 million in the past five years. Global Estimates of Modern Slavery notes that modern slavery occurs in almost every country in the world. The latest data reveals 27.6 million people in forced labour and 22 million others in forced marriages. Women and children bear the brunt of these awful living conditions. In terms of regions, Asia and the Pacific account for more than half of the global total (15.1 million) of those in forced labour. Next comes Europe and Central Asia (4.1 million), Africa (3.8 million), the Americas (3.6 million) and the Arab states (0.9 million). Most cases (86%) of forced labour occur in the private sector. The International Labour Organization, Walk Free and the International Organization for Migration partnered on the report.
  2. Climate risks in private equity. Leading private equity firms are continuing to pile money into fossil-fuel companies and polluting industries. According to the Private Equity Climate Risks Scorecard published last week, the eight largest private equity firms in the world have collectively invested more than US$1 trillion in oil, gas and coal since 2010, with the Carlyle Group, Warburg Pincus, and KKR as the three worst offenders. Their holdings are similar to the total of all financing by the world’s top five banks to the fossil fuel industry in 2021. 
    The scorecard was developed by the Private Equity Stakeholder Project (PESP) and Americans for Financial Reform Education Fund (AFREF). In an interview with Bloomberg, Alyssa Giachino, research and campaign director at PESP, noted that most private-equity managers aren’t tracked by financial regulators because private markets are exempt from most public disclosures. “This lack of transparency deprives the public and investors of a true picture of the damage inflicted by private equity on the planet and human health.” PESP, along with other environmental groups, has called on private-equity firms to move away from fossil fuels by 2030.
  3. Boardroom diversity stagnates. Diversity, equity and inclusion (DEI) should be an important consideration for all companies, yet some sectors are still struggling for inclusion. KPMG’s new report, Asian Representation on Fortune 1000 boards, reveals that Asians hold only 4% of board seats at Fortune 1000 companies, despite being 13% of the overall workforce. In fact, two-thirds of these companies have no Asian representation on their boards. The technology sector has the best showing (10%), with more than half of those companies having at least one Asian director. In terms of age and gender, almost 40% of Asian board directors are female, compared with an overall rate of under 30%. 
  4. Legal greenwashing jeopardy. Environmental groups, spearheaded by Greenpeace, have united to take legal action against the European Commission for allowing gas and nuclear energy in Europe’s list of permitted sustainable investments. The European Commission must respond by February or the groups will take the case to the European Court of Justice. The groups, including Client Earth and the WWF, contend that gas is the highest carbon emitter in Europe’s power sector, and that nuclear power uses huge amounts of freshwater, which results in negative impacts on biodiversity. “This fake green label is incompatible with EU environment and climate laws,” said Ariadna Rodrigo, EU sustainable finance campaigner at Greenpeace, in a news release. “Gas is a leading cause of climate and economic chaos, while there is still no solution to the problem of nuclear radioactive waste and the risk of nuclear accidents is far too significant to ignore. Furthermore, this winter we will face an energy crisis, and people will struggle with their energy bills. We are outraged that the same people that caused the climate and energy crisis, are the same ones profiting from it, while people are suffering.” 
  5. Climate fears in Southeast Asia. Floods, heatwaves and rainfall-induced landslides are the top three climate-related concerns for people living in Southeast Asia. Those are the findings of the Southeast Asia Climate Outlook 2022 Survey Report, which also reveals that biodiversity loss, a key factor in the climate crisis, has fallen off the radar. The region has been battered by major weather events this past year, including record-breaking heat in Singapore in May and flooding in Malaysia. Researchers at the Climate Change in Southeast Asia Program at Singapore’s ISEAS – Yusof Ishak Institute carried out the annual report. 

    Mathew Loup is Competent Boards’ Director, Marketing & Communications. Follow Competent Boards on LinkedIn.
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