Maria Castañón Moats, Paul DeNicola, and Matt DiGuiseppe of PricewaterhouseCoopers LLP on ESG as a method for assessing long-term risks and opportunities. [Emphasis added]
It’s important that directors consider both sides of the ESG debate. Certain environmental, social and governance issues may impact a company’s ability to be successful in both the near and long term; others might not. For instance, product safety is paramount for consumer product companies, but is less important in business services.
As such, there isn’t a singular approach to ESG that works for every company; which ESG issues are most important will vary by company size, industry, maturity and a multitude of other factors.
Two key points may be getting lost in the debate:
At its core, ESG is about companies developing long-term strategic plans, identifying and mitigating material risks, recognizing emerging growth opportunities to their businesses and their boards’ oversight of all of it.
More robust ESG data, not less, could lead to companies making more informed decisions and to better public policy.
Directors should also take the opportunity to move beyond the rhetoric and consider two key catalysts behind the calls for greater ESG disclosures —(1) professional investors who are using ESG data to inform decisions about whether to buy or sell your company’s shares and (2) ESG fixed income and equity investment funds that allow millions of retail investors to marry their financial goals with their values. We don’t anticipate these two catalysts losing strength any time soon.What boards should know about balancing ESG critics and key stakeholders