ESG: a superficial fad, or a serious agenda?

There has been a growing focus on the Environmental, Social and Governance (ESG) aspects of managing organisations in recent years, and we know there is a need to act. But is this seen as a fad or it there a genuine desire to deliver lasting changes in these areas? 


The regulatory requirements 


  • Environment – with the recent growing awareness about the impact of climate change, there has been more of a drive at senior political levels to deliver lasting change through regulations and laws, nationally and internationally, in response to environmental issues. The recent COP26 conference, and the documents produced by the UK Government supporting action to reduce carbon emissions, has led to an increase in regulatory and legal requirements such as TCFDs to manage a carbon reduction or Net Zero Carbon (NZC) Programme that organisations need to be aware of and action (see more below).  


  • Social – similarly, regulations and laws in response to social inequality have to some extent been around for a while but have not always been applied and adhered to. Again, in the face of high-profile scandals and publicly known organisational failures, these are now being addressed by regulations covering inequality and diversity which are helping to address these issues, but more does need to be done. Organisations would be well served seeking out best practice advice in this area. 


  • Governance – the regulation around governance in response to scandals such as Enron, Carillion and more recent accounting failures has been developed in the face of high public awareness and rightly so. We have seen an increase in regulator activity in these areas which routinely makes the news headlines and organisations are now under no illusion that if they do not comply with stricter regulation around corporate governance standards, they will suffer bad publicity, fines or even worse, lose their mandate to operate. 


How to manage the change 


We are now seeing many major organisations setting enterprise-wide transformation strategies and Net Zero Carbon Programmes to support these in response to this regulatory and legal backdrop. However, many others pay lip service to these areas and are not investing in lasting change. Some organisations will be leading the way in terms of strategy, change programmes, reporting and monitoring leading to lasting culture change. Others will be partially responding and may have a policy or strategy published, but many others will not have developed policies, strategies, plans or even see any need to act. This is a mistake. 


The legal requirements  


The UK Government has explicitly stated that: It expects all organisations to have a Net Zero Carbon strategy by 2023 In addition, from 6 April, it will be mandatory for 1300 of the UK’S largest organisations to report on the Taskforce on Climate Related Financial Disclosures (TCFDs). Typically, this will be any organisation over 500 employees or with a minimum £500m turnover. 


Are you ready to comply? 


If not, or you are not sure, then time is running out to act. ESG monitoring and reporting requirements are growing and the action to enforce compliance is only going to get stronger so, it is time to act and ensure any change activity required to deliver this is planned, funded and resourced adequately and taken seriously across organisations. If not, a superficial approach will end up in serious repercussions.  


Do you need change expertise? 


At Project One, we are used to supporting organisations across sectors with the regulatory change and are supporting customers with their ESG transformation programmes. For more information, please get in touch.

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