It isn’t just you – the amount of reports, studies and other information about the importance or value of ESG is overwhelming. The pendulum has swung so far from where it was just three years ago it has flown completely off its base. Further complicating the situation is that information is conflicting, confusing and requires fluency in an entirely new language of terms, acronyms and abbreviations.
Yes, it has become very difficult to keep track of it all.
What is Driving the Flood?
The massive information flow is a result of an unprecedented confluence of legal, market, public policy and consumer sentiment developments:
- New ESG laws and regulations are either in development or have recently been enacted around the globe
- New markets for ESG-aligned financial and consumer products are growing faster than other segments. Admittedly, the ambiguity in defining “ESG-aligned” allows the tag to be attached to about anything so in some ways, this claim could be misleading.
- Sovereigns are developing new policy positions (or updating existing ones) on climate, water and human rights issues.
- Consumers are more encouraged and empowered than ever by the above, adding fuel to the cycle.
Underpinning the change are technology, social media and FOMO (Fear of Missing Out):
- Technology such as blockchain and claims of artificial intelligence are showing that getting supply chain information/traceability – once considered impossible – is now almost easy.
- Reputational impacts stemming from social media are recognized as real business risks. Social media has also been proven to be a path for growth opportunities and influencing public policy dialogue.
- Individuals (en masse) are aggressively acting upon their desire to capitalize on current trends.
You Don’t Need to Read It All
There is some good news here. First and foremost, you probably don’t need to track all the ESG developments out there. In my opinion, the vast majority of the information is aspirational, marketing hype, general media coverage or highly technical. These are fine for providing context to ESG developments, but don’t fall into the category of practical, daily-useful information requiring immediate attention.
ESG information worthy of “now” attention includes:
- regulatory and legal changes in jurisdictions relevant to your company
- liability and litigation analyses, including those related to Boards, in jurisdictions relevant to your company
- shareholder proxy actions and trends
- updates on ESG reporting and materiality assessment
- ESG data verification/validation risks and solutions (although this is a topic rife with marketing hype)
- specific investor initiatives (mainly from investors that own shares of your company)
- communications from customers and suppliers
Sovereign public policy announcements can be a mix of the aspirational combined with practical guidance, especially for those interested in a long-term outlook of the setting for business investments.
Speeches and public statements from the current SEC Commissioners on ESG – such as yesterday’s lengthy comments from Commissioner Peirce – have become common and include overt sniping at each other. These statements provide excellent legal and jurisdictional context about the Commission’s role in creating regulation, but also conflict with each other and may create additional confusion.
So reclaim part of your day and ease your mind – you won’t miss out on anything important.