By Ira Srivastava
1. C-suite and boardroom diversity. In honour of International Women’s Day, ESG Investor compiled the results of a number of corporate gender diversity reports. Here are some key highlights:
- According to Moody’s Ratings, just under 30% of board seats were held by women.
- The MSCI’s ‘Women on Boards’ report found that the rate of increase of women in board positions in MSCI listed companies is only 1.3%. At this rate, gender parity on boards could only be achieved by 2040.
- A Morningstar analysis of C-suite salaries found that women made 85% as much as male executive officers in 2022.
- Research by Impact Cubed showed that there has only been a 7.8% increase of women in management roles over the last nine years.
- All of the reports above found that there were significant differences in gender progress in different regions of the world and varying industries.
Find the full reports here: Moody’s Ratings, MSCI, Morningstar, Impact Cubed.
2. Despite loud backlash, ESG is not dead. While companies are distancing themselves from the term ESG, many are sticking to the same sustainable principles while referring to them as something else. For example, BlackRock now refers to ESG investing as transition investing. Governments around the world are continuing to propose and pass sustainability regulations regarding human rights protections, climate reporting, emissions rules, and more. As investor expectations and the regulatory burden increases, companies must try to ignore the politically charged backlash against ESG and focus instead on tying sustainability performance to clear KPIs and metrics. Conducting risk assessments to determine vulnerabilities and developing strategies to mitigate these risks is essential. ESG and the backlash it has generated is just one of a long list of dilemmas businesses have had to address.
3. Businesses are failing to curtail travel emissions. According to a Transport & Environment report, over 80% of multinational companies have no strategy in place to limit emissions from business-related air travel. Of the 328 companies analyzed that do not have travel emissions targets, 25 of them were responsible for 36% of all emissions. Only five out of the 328 disclosed emissions from business trips and had commitments to halve emissions by 2025. Companies such as Amazon, Google, IBM, Microsoft, and Unilever have all made ambitious climate commitments but are failing to manage their air travel emissions. Volkswagen, Accenture, and KPMG International are the largest emitters who do not have a plan to reduce travel emissions. In order to limit emissions and stay in line with the 2015 Paris Agreement, business travel emissions must be halved by the end of this decade.
4. Canadian Sustainability Standards Board releases draft standards. The Canadian Sustainability Standards Board (CSSB) has released new Canadian Sustainability Disclosure Standards (CSDS). These are based on the International Sustainability Standards Board’s (ISSB) IFRS S1 and S2 disclosures released last June. This is only the first draft and is currently open to consultation. The primary difference between the CSDS and ISSB standards is the timeline, as the Canadian standards would give businesses more time to begin reporting. For example, Scope 3 emissions would not need to be disclosed until the third year of reporting. The initial effective date would also be shifted to January 1st, 2015 which is earlier than the date proposed by the ISSB standards. The standards are open for comments until June 10th, with the full drafts and feedback surveys found here.
5. Joe Biden’s Inflation Reduction Act has spurred private sector funding. According to a report by Rhodium Group, since the Inflation Reduction Act (IRA) was passed, the private sector has invested $5.47 in energy transition funding for every $1 of funding provided by the government. Sustainable investments have soared since the bill was passed in October 2022, with US$220 billion of funding going to renewable energy and sustainability projects. For example, electric vehicle investments increased by 115% from 2022 to 2023. The government taking the lead jump-started private sector action. Bob Keefe, director of advocacy organization E2, shared that “we are quite literally on the cusp of the biggest economic revolution we’ve seen in this country in generations”. It is estimated that the IRA could lead to over US$1 trillion in clean energy investments. Despite this flurry of action, more drastic mitigation measures are needed to hit the 50% emissions reduction required by 2030 to limit warming to 1.5 degrees Celsius.
Ira Srivastava is Competent Boards’ Program Coordinator. Follow Competent Boards on LinkedIn.