Amidst the geopolitical upheaval and costs of living crisis we are currently enduring, it is crucial that organisations stick with their ESG ambitions. At the beginning of 2022, ESG investments were set to hit record-breaking levels. Across the first half of the year, M&A activity based on ESG metrics had surged 11%. This represented a growing push for sustainable practice and progress towards the Paris Agreement of 2015. However, Russia’s invasion of Ukraine, the levying of international sanctions and the resultant impact on oil and gas prices have halted growth across the world. Consequently, nation states have been abandoning environmental commitments in a bid to establish energy sovereignty and combat sky-rocketing inflation. These international conditions sparked an explosion in the anti-ESG shareholder perspective, seeking an end to businesses’ sustainability obligations.
Regulators across the globe have had mixed responses to ESG, with the SEC seeking to implement a new regulatory framework, juxtaposing the actions of individual States seeking to remove ESG considerations from business. In the UK, during the battle for Prime Minister, concerns regarding the green levy have been raised as a possible exacerbator of the cost-of-living crisis. However, it is more important now than ever that organisations continue to develop their ESG investments. Anti-ESG movements seem tone deaf amidst the backdrop of the hottest summer on record for many countries. The logic that now is the time for businesses to cut back on renewable energy projects and stop prioritising boosting their sustainability credentials seem flawed, particularly in the light of the spiralling prices of non-renewable energy resources. Failure to invest in renewable projects will further the challenge of achieving Net Zero by 2050.
Whilst there is work to do in reducing the opaque elements of ESG metrics, in addition to a new emphasis on recordkeeping following the DWS raid, organisations cannot forget about ESG because of the risk of recession. Despite the challenging economic conditions, it has been reported that many businesses are continuing to invest in automation and technological progression. This is indicative of businesses having the capacity to invest in their organisation’s sustainability.
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