ESG

“The consideration of ESG (Environmental, Social and Governance) factors has become critical to the success of businesses across all sectors. Customers, employees, shareholders, lenders, rating agencies and regulators are demanding companies consider how their business impacts the world, their contribution to society and how they conduct themselves. Businesses not taking ESG seriously are beginning to lose customers, employees and financing; eventually they will become unviable. Market leaders are taking a strategic response to ESG, changing their products and services, processes, operations and supply chains. The first step to embed ESG into a business must be taken by the Board, taking on the responsibility and accountability to drive the transition towards becoming an environmentally and socially responsible business. Stakeholders are pushing for increased transparency and it’s working. New mandatory reporting standards are fast approaching and, where it’s not mandatory, lenders and investors are still withdrawing funding from, and voting against, businesses not considering ESG. COVID-19 has highlighted the social and governance elements within ESG as businesses seek to protect jobs, support efforts to control the spread of the virus and ‘do the right thing’. It has highlighted the importance of resilience to extreme change and our ability to undertake radical transformation; it provides an opportunity to embed ESG into future board level decisions. ESG isn’t a hygiene factor for today. Its impact is already profound and it’s a critical factor for businesses that want to be ready for further fundamental changes coming down the track. ESG is no longer a choice; it is an imperative.”

Sources: https://assets.kpmg/content/dam/kpmg/uk/pdf/2020/08/esg-brochure.pdf