By Ira Srivastava
1. ESG considerations can tank mergers and acquisitions. According to a Deloitte survey of 500 mergers and acquisitions professionals from firms around the world, 72% of respondents shared they would walk away from a deal due to ESG issues. This number was below 50% the last time Deloitte conducted this survey. They also reported being willing to pay a higher price for companies with strong records on ESG. From 2022 to 2024 there was a 7% increase in respondents whose organizations consider how an acquisition will impact their own ESG progress. Acquisition targets are reporting similar changes, as two-thirds of those respondents said they were “forced to abandon a divestiture for ESG-related reasons”, up from one-third in the previous survey.
2. The benefits of ESG reporting. Organizations are increasingly using ESG reporting to increase value creation. The data collected can help inform business decisions in the short, medium, and long term. According to a Morgan Stanley report, 80% of investors take environmental and sustainability considerations into account when choosing where to invest. Reporting can also increase efficiency by finding redundancies. Additionally, it is a useful tool in identifying potential opportunities companies can take advantage of. The increased transparency that comes with ESG reporting also increases trust with shareholders, customers, and other stakeholders. With new corporate disclosure requirements coming out around the world, proactive and intentional ESG reporting is becoming a core component of any business’ operations.
3. ESG in the United States. Usage of the term “ESG” in annual reports has dropped by 60% from 2023 to 2024 in the U.S., while a 10% decrease was found in European financial reports. This is largely due to the fact that ESG has faced withering fire from the right in the United States since 2022, and companies are trying to avoid partisan attacks over ESG policy. Republican lawmakers across the country have proposed or passed laws that would ban ESG investments, considerations, and more. Mentions of human rights and climate change have dropped as well, with conversations largely focused on geopolitical issues and artificial intelligence. However, some companies such as Microsoft, HSBC, and Google are choosing to strengthen their ESG commitments.
4. The largest solar farm in the world comes online in China. Xinjiang, China is now home to the largest solar farm in the world. China has long been a leader in renewable energy research and development, and is responsible for the drastic drop in renewable energy costs around the world over the last decade. This new farm is the size of New York City and can generate 6 billion kilowatt hours annually, enough electricity to power Luxembourg for a year. Over the years, China has been demonized as a coal-burning greenhouse gas mega-emitter, but the country’s dedication to renewable energy could not be more clear. According to Energy Monitor, “wind and solar energy are expected to overtake coal in the country’s electricity production capacity for the first time in 2024”. The country is developing at breakneck speed, and has advanced renewable energy technology more than any other country in the world.
5. Microsoft, Nvidia and OpenAI face antitrust investigations. The United States Federal Trade Commission and Justice Department will begin investigating three artificial intelligence giants. The technology industry has been an arms race of artificial intelligence development since the launch of OpenAI’s ChatGPT. Microsoft is heavily invested in OpenAI, providing US$13 billion in funding for AI model training. The AI industry has been developing at a lightning-fast pace with little oversight, as breakthroughs come faster than regulations can be introduced. A letter by OpenAI employees states that “AI companies have strong financial incentives to avoid effective oversight” and they “have only weak obligations to share some of this information with governments, and none with civil society”. These investigations will focus on the investments and partnerships being made between developers of AI programs and cloud computing organizations that fund them.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.