ESG refers to Environmental, Social, and Governance criteria, which are standards used to evaluate a company's impact and sustainability practices in areas like environmental conservation, social responsibility, and ethical management.
In today's rapidly evolving business landscape, ESG practices have become more than just a compliance requirement; they are a strategic imperative.
Global Investment Trends: There is a growing recognition among investors that ESG practices should be integral to company strategies. About 82% of investors surveyed emphasised that ESG concerns should be managed at the C-suite level for reassurance.
Australian ESG Trends: In Australia, there's a strong trend towards recognising environmental risks, with 39% of the ASX100 acknowledging biodiversity loss as a business risk. Additionally, more than half of these companies (55%) obtain third-party assurance for their sustainability information, which indicates a serious approach towards credible ESG reporting.
Regulatory Developments: New ESG regulations are influencing corporate discussions and strategic decisions in boardrooms, driving a focus on sustainability and non-financial reporting. Businesses are encouraged to use materiality assessments and align their reports with both mandatory and voluntary frameworks.
Shareholder Activism: There has been an increase in shareholders putting resolutions to AGMs related to ESG matters, both in Australia and internationally. This indicates a rising pressure from investors for companies to engage seriously with ESG issues.
Litigation and Compliance: There is an increasing trend in litigation related to ESG, such as the claims filed against major corporations like ExxonMobil and Woodside, challenging their environmental disclosures and practices. This reflects a broader global shift towards greater accountability and transparency in corporate ESG practices.
