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The rise of Environmental and Social Governance (ESG) and what it means for your business

A recently published report has found that nearly two-thirds of firms see the climate emergency and the reputational impact of not taking action are key drivers for energy efficiency projects.

ESG is a new term that business leaders may not have heard yet, but it’s making a big impact in the investment market, and where finance leads others will follow. 

ESG stands for Environmental and Social Governance, it represents a set of standards that will be applied to assess businesses on their net contribution to climate change prevention and to the wider society, and the momentum building around this idea is a sign of greater change to come.

“At least 80% of the global economy has committed to net zero or carbon neutrality targets. Our challenge now is to deploy the investment we need to deliver those targets around the world. This means we are going to move towards making it mandatory for firms to publish a clear, deliverable plan…”

Chancellor Rishi Sunak MP

For example, at the start of 2021, BlackRock, the behemoth investing firm, and by far the largest money manager in the world, announced that environmental sustainability was now a core goal for the company and that a “tectonic shift is coming”. They began driving investors towards sustainable enterprises, and where BlackRock goes others will follow, driven by huge financial opportunities. 

Similarly, as COP26 came to its close, we saw Rishi Sunak take to the stage to announce that the largest firms in the UK will be forced to publish their net zero strategies.

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