By Ira Srivastava
1. Changes to United States anti-bribery laws. In the past, the Foreign Corrupt Practices Act only applied to entities giving bribes without including punishments for receivers of bribes. A new amendment states that foreign officials must not “corruptly demand, seek, receive, accept… directly or indirectly, anything of value personally or for any other person or nongovernmental entity”. Punishments include up to 15 years in prison and monetary penalties of $250,000 or triple the value of the bribe. This new rule will incentivise companies not to accept bribes, and increase reporting requirements as the Justice and State Departments would have to report to Congress each year on bribe demands. A study by the OECD found that bribe receivers are punished five times less often than bribe payers, and this rule will help correct that imbalance.
2. Many investors plan to boost investments in sustainability in 2024. Morgan Stanley has released its “Sustainable Signals” report, a survey of nearly 3,000 investors around the United States, Europe, and Japan. Here are some key findings:
- 77% of respondents have an interest in green investment, and 54% plan to increase sustainable investing in the next year
- Over 70% of surveyed investors felt that strong ESG commitments would bring a greater return on investment
- Investment interest varied around the world. 84% of US investors, 85% of European investors, and 56% of Japanese investors had interest in sustainability investments
- Sustainable investments have grown over the last two years and are expected to continue to increase. Reasons cited included inflation, new climate science, return on sustainable investment, the COVID-19 pandemic, market dynamics, and the Ukraine war
- Investors do not see a trade-off between ESG and investment returns, and largely believe that the two are correlated
Find the full report here.
3. European sustainability practices in the crossfire this year. Ahead of the European Union elections in June, their world-leading sustainability regulations such as the Corporate Sustainability Reporting Directive (CSRD) are under fire. Farmers in France are blocking highways with tractors in protest of environmental regulation and international free-trade agreements that reduce crop profits. Companies are lobbying against the CSRD, with one multinational corporation based in the United States sharing that “they expect to spend $50-60 million for compliance over the next 3-5 years”. Protests already caused the EU to reverse course on agricultural regulations to preserve biodiversity, so these sustainability policies might be targeted by right-wing politicians before the election.
4. Fixing ESG’s reputation. ESG backlash has been growing over the last two years, showing little sign of stopping. However, companies still largely support ESG initiatives such as diversity and inclusion, emissions reduction, and sustainable investing. According to ESG experts speaking to Business Insider, “much of the work continues because many companies across industries see it as good for business”. The term ESG has become too politicised and divisive, and one solution is to rename the movement. Alex Edmans, a professor at London Business School, proposes ‘rational sustainability’. This includes all value creating factors and expands beyond the traditional topics of ESG. Centering the concept on value creation reduces the chance of backlash as that is the core goal of every company.
5. Complicity of the fashion industry in human rights abuses. The Business and Human Rights Resource Centre has published a report on the fashion industry and human rights violations in Myanmar, a country under military rule. Hundreds of companies including H&M, Primark and Lidl all faced abuse allegations, with conditions significantly worsening in the three years since Myanmar’s government was overthrown. The most common complaints were wage theft, unjust firing, mandatory overtime, and excessive working hours. Workers have also been detained, arrested, and killed. Apparel companies that are unable to protect their workers will need to take stronger action to do so. Find recommendations to the fashion industry and governments here.
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Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.