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Executive summary│8 themes shaping today’s ESG landscape
The corporate and investor guide on what are the key conversations
ESG’s decibels of debate are rising but its underlying impulse is here to stay
Corporate and investor guide on what are the key ESG conversations through eight key themes
- Mapping for ESG requires a thorough and inclusive exercise. Not all aspects of “E”, “S” and “G” are priorities for all entities, and it is unrealistic to expect that they do not have to make hard trade-offs within and among ESG dimensions, or that they can lead on every theme.
- What is becoming progressively clear is that ESG’s use has evolved from a single focus approach towards rapid development through a more nuanced and engagement-oriented strategy over exclusion.
- We continue to believe that we are in the “measurement” phase of the ESG journey, marked by greater penetration, rising focus on product impact and increasing regulatory scrutiny on both corporates and investors, with opportunities to prepare for the “refinement” phase (broad adoption and emphasis on measurement of outcomes), ahead.
- Against this backdrop, we are cognisant that as ESG’s contours and penetration have increased, so have the decibels of debate.
- There are those that believe the pursuit of profitable growth alongside sustainability requires inscrutable trade-offs, forgoing revenue and profit for the sake of society and climate change. This “back-to-basics” approach reflects a rising willingness to re-focus on financial fundamentals and a move away from the intense productisation of ESG.
- Yet, we believe that financially successful entities that integrate ESG priorities into their growth strategies outperform their peers – provided they also outperform on the fundamentals.
- More broadly, we view louder deliberations and pockets of pushback as indicative of ESG’s burgeoning relevance and a natural and necessary step in its maturation.
- Our aim of this report is to offer a holistic guide to corporates and investors on what we believe are the key ESG conversations, through eight key themes:
1.Sustainable investing. Demand, critiques and the path forward.
2.Capital allocation. Sustainable Development Goals (SDG) related investments implications on the return on capital.
3.Renewables capex supercycle. “Atlantic IRA” and the goldilocks era of regulation.
4.Biodiversity. Data availability and quantifying social costs.
5.Circular economy. Integrating circular economy solutions that precede recycling.
6.Social considerations. Access, affordability and human capital.
7.Governance considerations. Greenwashing and safeguarding social licence.
8.Artificial intelligence (AI). AI’s influence in scaling ESG’s maturation.
