ESG Trends

October 11, 2023
By iQ Staff
mother nature screen cap

Here in the United States, the term “ESG” has become politicized. BlackRock CEO Larry Fink, arguably the most prominent proponent of ESG principles, famously declared that he’s stopped using the term because of this.

However, the financial community continues to monitor environmental, social and governance risk and corporate leaders continue to advance the underlying spirit of the term ESG, even as they back away from the political debate. This only makes sense: whether driven by risk management, competitive pressures or old-fashioned moral sense, the actions of an organization’s leaders regarding climate change, social inequities and responsible governance will always draw the scrutiny of customers, investors, employees, partners and regulators.

In our work with clients across multiple industries, we’re seeing an increase in the use of such terms as sustainability, impact and environmental progress to describe corporate initiatives and reports in these areas. We’re also seeing a few other interesting developments.

 

Accessibility

ADA compliance has become an essential dimension of ESG reporting. Increasingly, we’re seeing companies taking the idea of accessibility a step further. Perhaps the greatest demonstration of this is the video Apple released upon publication of its 2023 Environmental Progress Report. The idea is to prioritize sharing information in a way that’s readily understandable and engaging to a broad audience.

 

Biodiversity

While climate change remains the overriding theme in discussions about environmental sustainability, we’re seeing the emergence of biodiversity as a related objective. For many businesses, the implications of this extend beyond their own operations to those of their suppliers, with industrial agriculture drawing increased scrutiny.

 

Human Rights

Traditionally the domain of governments, human rights are increasingly seen as a responsibility of the business community. Stakeholders are scrutinizing a company’s adherence to the human rights elements of its own code of conduct along with the practices of its partners and suppliers. In the U.S., California has been at the forefront of human rights legislation, with other states expected to follow. As a complement to their materiality assessments, businesses are encouraged to conduct saliency assessments – evaluating the scope of a potential human rights issue, its severity, whether it’s possible to remedy the issue and the likelihood of occurrence. Particularly when considering acquisitions, businesses are cautioned to “avoid buying a human rights issue.”

 

Don’t let the political rhetoric distract you from what remains true: leading businesses and nonprofits in all sectors continue to invest in initiatives that support long-term, sustainable operation and profitability.

 

Header credit: Apple