Understanding Environmental, Social, Governance (ESG)

If you follow financial or CSR related news at all, you’ve probably seen and heard the phrase “ESG” with more and more frequency. Even though it was first coined as a phrase more than 15 years ago, ESG is undeniably taking center stage in 2021. In a recent McKinsey & Company CEO interview on investing for climate action, Charles Edmond, president and CEO of Caisse de dépôt et placement du Québec (CDPQ) and cochair of the Investor Leadership Network (ILN) CEO Council, is quoted as saying, “A CEO recently told me that, a year or two ago, ESG was the last question that would come up in (an investor) meeting if there was time. Now those meetings start with that question.”

Furthermore, Jean Raby, outgoing CEO of Natixis Investment Managers and cochair of the Investor Leadership Network (ILN) CEO Council claims that “The debate of financial performance versus ESG integration is behind us, or at least it’s fast becoming that way. It will be completely mainstream within five years. It’s common sense that supporting energy transition, climate-change transition, and other ESG policies are long-term drivers of performance.”

Investor demand, the effect of Larry Fink’s annual letter to CEOs, shifts in consumer behavior among younger generations, and the collective impact of the pandemic, racial justice, and politics have led to the increasing importance of ESG for companies. This was evidenced at the recent ACCP Summit on Understanding ESG where nearly 100 attendees discussed ESG as a key business driver for companies today.

75% of investors say sustainable investments have become more important to them over the last five years, driven by younger generations

Image: ACCP Making the Case Toolkit, 2021
Stat: Organization for Economic Cooperation and Development (2019)

Over the course of two afternoons, attendees learned what is encompassed within the topic of ESG, the importance of materiality assessments, identification of key stakeholders and issues relevant to them, and the role of reporting ESG initiatives.

Key takeaways from the Summit include:

  • ESG is relevant to all companies
    • Whether private or public, B2C or B2B, corporations are feeling pressure from customers, suppliers, vendors, employees, and activists to demonstrate positive societal impact.
  • A solid ESG strategy requires focus
  • Strong ESG execution requires integration
  • The next big thing – uniform ESG reporting framework

As ACCP continues to strive towards our vision of a world where corporations leverage their resources to improve society, we look forward to learning more and continuing the conversation on the importance of ESG.

Clear globe with ESG icons

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