In recent years ESG matters have been hitting the headlines time and time again.
A series of corporate failures and scandals have shone a spotlight on Governance, leadership and corporate culture.The UK Government has responded with new regulations and a new regulator, the independent Audit, Reporting and Governance Authority (ARGA), which will take the role of enforcer in chief with new powers to act and punish companies who are pushing regulations and standards.
In 2018, the Environment took centre stage as a result of the BBC’s Blue Planet 2 highlighting the damage caused by plastic in our oceans. The same year, Greta Thunberg began her school strike outside the Swedish Parliament and the Extinction Rebellion took to the streets for the first time in London. The momentum continued and the Oxford Dictionaries named ‘climate emergency’ as their word of the year in 2019 due to the scale of increased usage. Crucially, multiple businesses in every sector across the globe stepped up and made ambitious plastic and climate pledges.
In 2020, as a result of the COVID-19 pandemic, the focus has shifted to Social – how are companies taking care of their workforce, managing relationships in their supply chain, pivoting their business to directly address the crisis, make a societal contribution, and support the most vulnerable people in our communities? If they’re receiving bailouts, have they been paying their taxes and paying out dividends? The world is watching and judging.
The momentum around ESG is clearly not just anecdotal as a result of daily mentions in the media. It is integral to business, particularly those with a future focus.
The fundamental nature of ESG is evidenced by numerous surveys of investor trends. For example, an annual survey by BNP Paribas, of 347 institutional investors from across the globe,has shown a year on year increase of investment in ESG funds by asset owners and asset managers. And nine in every ten of the world’s largest fund managers representing $86 trillion are now signed up to the Principles of Responsible Investment (PRI).
Communications also have an important role to play. Analysts look for information in real time – they don’t wait for the next Sustainability Report to land. They are looking at the entire communications ecosystem published by a company and about a company.
At the centre of this, and within the company’s control, is an effective corporate website. In light of the challenges posed by Covid-19, most investors have reduced direct access to companies, creating an even more vital need for easily accessible ESG resources.
Our observation of the shifting investor mindset towards ESG, alongside the mainstream agenda, is that of commitment and consistency. ESG performance is ultimately the measure for how a business behaves, which is key to a company’s reputation and its ability to create value in the long term. It therefore matters all of the time.
The recent Covid-19 crisis has exposed the weakness of, and disparities created by, our current economic model. Momentum is growing behind the Build Back Better movement, including two open letters being sent to Boris Johnson in a matter of days from 350+ public and private sector organisations requesting that the government build the economic recovery around a greener and more just future for all. ESG will increasingly matter more.