ESG – what is ESG?

I am quite amazed that so many people still are unfamiliar with ESG.

While ESG applies primally to Companies it also applies to Individuals and Governments.

The basic principle is for the world to be a kinder, gentle, and more caring world, This involves Collaboration and less self-interest.

So, let’s look again at what ESG is:

E- Environment — Care for The Environment to make the world a better place for us and future generations

The fight for Carbon Mitigation is now a global priority.

Regulations and Fines are increasing for example:

Israel — Green building standard to become compulsory in March 2022

UK — Only Electric Vehicles will be allowed to be sold from 2030

The success of this will require Finance, Investment, and Innovation.

While Regulation is a driver here, the Solutions to this are a big Opportunity.

S- Social — Empower your Employees and the Community to be independent and contributing to society

We have already seen an increase in treating your Customers Fairly. Companies also need to treat their Staff and Invest in the Community where they Operate,

G-Governance — Do it properly in an integrated way that combines Kindness and Truth.

Is Your Company aware of both the need and Opportunity of ESG?

It is increasingly clear that Companies need to explore the risks and opportunities that climate change poses to their firms,  and make efforts to reduce their carbon footprints. All board members need to understand these issues to participate in the debate, both executives and non-executives

The purpose of this toolkit is to provide Companies withy a Holistic approach to incorporate an ESG culture into their Company., and through a few clear steps, they can help their boards and staff begin to tackle it…

Failing to prepare for climate change – or being unable to clearly demonstrate positive action – could have a significant impact on the sustainability, performance and risk profile of businesses.

Challenges go across businesses and the relative importance will vary across industries. Global agencies and governments will be pushing a low-carbon transition (e.g. UK Government net-zero target) and so – quite apart from the moral imperative and customer pressure – businesses will have to cope with the significant impact of the low-carbon transition as well as the physical impacts that are already baked in.

All challenges are worth considering in the context of competitor positioning even if they may not seem immediately relevant.

Operation Supply chain disruption

– inability to source materials on time, reliably, and at a manageable price (WEF: disruptions up 29% since 2012).

 Location of operations or services – ongoing viability challenge given heat, extreme weather events, political instability, and other impacts.

Insurance – reduced ability/increased cost to insure operations and services against extreme weather impacts.

Employee view – misalignment with employee demands for environmental action leading to reduced ability to attract and retain talent.

 Consumer & Customer Attitudes and Behaviour

Sector stigmatisation and Consumer Feedback: Consumer sentiment and preferences can change quickly due to raised awareness, e.g. response to Blue Planet plastics, and availability of other business models such as rental or shared ownership of items, e.g. car clubs. Consumer Behaviour: Changes could manifest in reduction of overall demand, or moving to competitor equivalent or substitute products with lower environmental impact (e.g. electric cars).

Investor Demands

 Green investors are challenging organisations and pushing them harder to be more environmentally responsible – and this trend is expected to increase. More institutional investors are challenging the long term viability of products and business models. They are expecting more focus and diligence from executives, including scenario analysis and climate-related disclosure of Governance, Strategy, Risk Management, and Metrics and Targets (Source: TCFD). E.g. Schroders have voted on over 60% more climate change and renewable energy shareholder resolutions in each of 2015-2017 compared to 2010.

Regulatory, Policy and Legal

Stricter and more demanding controls – in April 2019, the UK government updated its list of civil penalties for breaches of climate change-related regulations. Wider reaching remit with greater impact – e.g. carbon price is set to rise significantly and will soon cover a quarter of global emissions. With higher costs, demands could fall, demand elasticity could lead to c.10% decrease in profits (Schroders). Risk of litigation for breaches or lack of progress: In 2018, major litigation cases included Exxon Mobil, the Dutch government, the US government and RWE. Cases weren’t all upheld, but illustrate a turn in sentiment a

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