Why Your ESG Strategy Is More Important Than Ever?

29 June 2022

As investors, corporate boards, and government leaders expect progress on climate pledges in 2022, following the unprecedented market and policy momentum in 2021. Climate, biodiversity, and other environmental concerns, as well as social issues like diversity, equity, and inclusion, and worker wellbeing, seem to be poised to remain in the spotlight.

Businesses have continued to build their ESG plans since the FCA's ESG Sourcebook was released in 2021. As a result, businesses will be able to hire people who have prior expertise and experience in this field.

Furthermore, there has been a substantial trend toward worldwide standard convergence. The SEC has revealed its regulatory roadmap, which includes four key ESG areas: climate change, cyber risk governance, board diversity, and human capital management; draft rules are expected in early 2022. The SEC is also paying more attention to ESG-related comment letters.

As ESG becomes more incorporated into reporting and disclosure, having an ESG plan and governance structure has become the rule rather than the exception, especially for big publicly traded organisations. As a result, boards will very certainly need to alter their oversight to accommodate these developments while also meeting the needs of regulators, investors, and other stakeholders. Companies may find possibilities more quickly and confidently with a more robust ESG governance and data measurement and reporting methodology.

In 2021, there was an increase in shareholder agitation in this area, with directors being voted down for failing to have viable climate action plans. This pattern is projected to continue in 2022. Furthermore, efforts to diversify boards and build policies that support meaningful diversity, equity, and inclusion should go beyond a box-ticking exercise and toward an understanding of how variances in identities, knowledge, and leadership styles can drive growth and innovation.

Governments and organisations are increasingly incorporating ESG capabilities and sustainability into their policies and strategies. Integration and resilience measures in their investment strengthen their ESG skills and include sustainability into their policies and strategy.