Supply chain News and trends

Five years ago, the capital allocated to ESG was around $5-6 trillion, in 2022 it has multiplied to $30 trillion.

Via EcoVadis

As investors query the value of ESG, Mandi McReynolds, Head of Global ESG, Workiva, outlines three steps to link sustainability and business value creation
Evidence overwhelmingly suggests that companies, which get their ESG proposition right can create more business value. By paying attention to ESG concerns, companies don’t compromise their returns – rather, the opposite.  

But even as the case for a strong ESG proposition becomes more compelling, an understanding of how ESG criteria link to value creation is often less comprehensive. This can lead to investor concerns and mistrust. According to a recent Workiva survey, 52% of UK investors find it difficult to trust a company’s actions and what they say, when it comes to the environment and society.  

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In his annual letter to CEOs, BlackRock CEO Larry Fink says that, while decarbonizing the global economy is ‘the greatest investment opportunity of our lifetime,’ he also asserts that ‘divesting from entire sectors will not get the world to net zero.’

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With regulators, investors and customers demanding cleaner business processes, companies understand the need to improve, but can find it daunting to start measuring all the ways they emit carbon. Organizations must understand Scope 1, 2 & 3 emissions, address ESG issues (environmental, social, governance) and get to grips with terms like “carbon-neutral” or “net-zero” and how they apply to their business operations and strategic objectives.

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Investors stepped up pressure on corporate climate lobbying on Monday, launching a new 14-point action plan for companies to stick to or risk having their actions put to a shareholder vote.

The Global Standard on Responsible Climate Lobbying urges companies to commit to responsible climate lobbying, disclose the support given to trade groups lobbying on their behalf and take action if it runs counter to the world's climate goal.

That goal, to cap global warming at 1.5 degrees Celsius above pre-industrial norms by mid-century, is moving increasingly out of reach, scientists say, with urgent action needed in the short-term to have any hope of reaching it.

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While real estate owners large and small have offered bold promises about reducing carbon emissions, diversifying boards and other initiatives, it is only recently that many of them have begun to share details on just how they plan to achieve those goals. Only now are we beginning to see both concrete plans to reach these often lofty objectives, as well as the methods of reporting they will use to measure their progress. These early returns show there is much to be encouraged about, while also leaving considerable room for concern about whether these measures, focused almost entirely at the property level, will ever have meaningful impact beyond the sum of their various parts.

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