Foreword: ESG moves up the agenda
At GlobalData, we define a theme as any issue that keeps a business leader awake at night. Our thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors. Companies that invest in the right themes become success stories. Those that miss the essential themes in their industry end up as failures.
Environmental, social, and governance (ESG) is a theme that is becoming increasingly essential for all businesses to know and understand. Over the past five years, there has been a rapid increase in the number of companies conducting voluntary ESG reporting and promoting themselves, their products, and their services as sustainable.
Now the market is being formalised. ESG reporting standards are being made mandatory in Europe, with the US likely to follow. A broader range of stakeholders scrutinise ESG claims, including regulators, shareholders, customers, and suppliers, and the consequences of exaggerating these claims go beyond short-term public relations embarrassment.
In addition, there is a growing desire to hold companies accountable for ESG performance across their value chains. Many companies will be required to report scope 3 emissions, which include emissions generated by that company’s suppliers and customers.
But it goes beyond emissions to the impact on communities, workers, and the local environment. The impact will not be confined to heavy industry and big polluters. All businesses must be aware of the growing significance of ESG and the risks and opportunities that come with it.
