Re: Waste & NIMBYism
Despite regional conflict, a pandemic and an economic and inflationary crisis, the field of ESG has continued to grow. But what are the threats we need to be cautious of?
Right now, ESG seems untouchable. In Europe, work continues to expand the scope of ESG regulation with the development of the EU Taxonomy and the Corporate Sustainability Reporting Directive.
Closer to home, within Australia we have seen the topic of climate action impact on our federal election and policy, with a ‘teal wave’ of climate action supporters beating incumbents and contributing to a change in government.
And within the realm of investment, new ESG funds continue to spring up and investor activism is driving significant change, including the redirection of AGL.
Last month, Currie’s Principal Mark Paterson moderated an ESG panel discussion at the Public Relations Global Network’s Annual Summit in Singapore. What he heard there reflects my own observations at the Australian Farm Institute’s ESG Conference in Canberra – ESG is firmly entrenched, but there are some storm clouds on the horizon.
Here are the top five trends that are threatening ESG’s rapid growth:
Greenwashing is nothing new, but the mechanisms have become increasingly sophisticated. There is an arms race between rule-makers and reporting companies.
Rule-makers such as GRI, VRF and regulators are tightening up reporting requirements to reduce the incidence of greenwashing. Conversely, companies are pushing the boundaries to determine what they can get away with.
ESG reporting is rife with greenwashing and suspect ‘positive impact’ claims. If rule-makers can’t crackdown on this, there is a real risk that ESG will lose significant public traction.
Three years ago, the conversations we had on ESG had to start with the ‘why’. Why should your company set goals, track and measure, and report on ESG?
Since then, things have changed. The people we talk to today already know the why, and they’re on board. The talks we have now are about how to do it. How do we report and set goals? How do we reduce emissions or tackle human rights issues?
The ESG field is still catching up on the how – there’s an enormous range of tools, but very few are fit-for-purpose. Unless we can rapidly build the tools and know-how, we may be stuck in the ‘how’ phase for quite some time before we can talk about ‘what’s next’.
The ESG field is growing rapidly as well as the demand for services. On the plus side, this means there’s huge opportunity for change and positive impact. We already see a wealth of ESG products and services being rolled out to help companies make progress on sustainability.
On the flip side, there are many opportunists who are taking advantage of the high demand. With so many new products on the market, it becomes difficult for decision-makers to know who or what to trust.
Until some clear winners emerge, the wide range of products and services may actually hinder progress more than help.
At the moment, there’s just not enough know-how. ESG is still a relatively new field. And the talent pool is extraordinarily thin compared to the enormous demand that is growing year-on-year.
All too often you see an ESG manager who has been pulled out of compliance, marketing or procurement divisions and thrown in the ESG deep end. For many companies, ESG staff are working it out as they go along.
It will be some time before a sizeable ESG talent pool is developed to service the existing and growing need.
There’s a huge amount of scepticism towards ESG for the reasons outlined above. And there’s a real risk that this scepticism could grow if problems like greenwashing and opportunism continue to plague the field.
As ESG practitioners, we have to be wary of getting caught up in the growing movement at the expense of people’s trust.
It’s our responsibility to ‘cut the crap’ and do the work with integrity. This is in part why we are involved with the Global ESG Monitor (GEM). The GEM reviews the transparency and effectiveness of ESG reporting around the world.
We want to shine a light on poor reporting and suspect claims. The 2022 GEM will be released at the end of November, and we will be hosting a webinar in partnership with the UN Global Compact to share it.
The event is being held on Tuesday, 13 December, 8:30 – 9:30AM AEDT and you can register for it here.
We are open to continued conversations and feedback on how we can improve it the GEM to ensure it delivers on its goal – to uphold integrity in ESG, call out greenwashers and celebrate companies that are truly transparent.
