Long-term sustainability is critical for every business. Measuring the route and timeframes to successful implementation of sustainability principles will remain high on the agenda for business and investors for some time.
Underlying those sustainability principles there are three key pillars of an organisation’s Environmental, Social and Governance (ESG) considerations, which should be embedded in its strategy and reflect its purpose – how it treats employees, evaluates its supply chain, governs its business and lessens its impact on the environment.
Robust ESG credentials are becoming increasingly important in attracting investment as well as determining who you will do business with, and who will do business with you.
The environmental aspect of ESG should focus on minimising and reducing an organisation’s impact on climate and nature. Under proposals announced by Chancellor Rishi Sunak at the COP26 climate summit, financial institutions and companies with shares listed on the London Stock Exchange will be required to publish their net-zero transition plans from 2023. However, the pressure to demonstrate positive environmental commitments is rising for all organisations, with consumers, suppliers and investors seeking answers. Organisations can demonstrate meaningful change by setting and achieving targets that reflect their goals and are readily quantifiable.
Much of the focus currently is on the environmental pillar of ESG, with growing pressure on the private and public sectors to tackle climate change in the aftermath of COP26, but social and governance considerations should not be overlooked. The former reflects an organisation’s values and how it conducts its business. What initiatives does it have in place to care for the health and welfare of its people and to promote a more diverse, inclusive, and socially and ethically responsible culture? If an organisation is already demonstrating best practice, then there may be benefits in collaborating with others, where appropriate, to share best practice for the good of society as a whole. We can all play our part in driving positive societal change.
While governance may appear obvious on the surface (it’s a given that compliance with regulatory structures is vital), we have seen the sands of regulation shift rapidly in recent months as a consequence of the pandemic and Brexit. Businesses in many sectors have been grappling with short-notice compliance changes. Longer term, we can expect to return to more stable regulation, but it is not a case of standing still and resting on the laurels of past success.
Challenges remain of ever-increasing regulation in all sectors, and demonstrating and measuring compliance is now part of the overall ESG factor review. While reputation management may come into sharp focus if an organisation fails to comply with regulation, it can be some time before investors are persuaded that any failure was a one-off.
We support clients on all aspects of ESG on a daily basis – from advising regulators and energy businesses on innovative energy projects and providing fundraising and corporate finance advice to supporting clients with health and safety and data protection compliance.
In addition, our employment team works closely with clients to ensure their employment policies and their initiatives to encourage diversity and inclusion are robust. I regularly work with pension trustees and sponsors to ensure they meet their detailed regulatory requirements while delivering against the expectation of their schemes’ members.
At Shepherd and Wedderburn, we have placed ESG at the heart of our operations. Our ESG Statement underpins the way we work and the process of assessing our ESG credentials has deepened colleagues’ understanding of the part we all need to play to achieve our objectives, as well as enhancing our advice to clients.
Shepherd and Wedderburn is committed to being net zero for greenhouse gas emissions by 2030 and we are working with clients with the common objective of stimulating a green recovery from the recession caused by the pandemic. In addition, we work hard to foster a working environment in which colleagues are happy and treated well, and diversity is celebrated.
Embedding ESG into the way we do business has been a hugely positive process for the firm and has benefitted our clients by allowing us to share our practical experience with them to help achieve their ESG objectives.