[Ed. note: Today is the 22nd anniversary of the terrorist attacks on the World Trade Center, the Pentagon and United Flight 93. It is a difficult day for many. I had a friend who perished in the first tower. A few months later, I went to work for Marsh & McLennan which experienced a loss of colleagues second only to CantorFitzgerald. We take this moment to remember those who died in the attacks including first responders who lost their lives years after being exposed to the toxic aftermath.]
Not long ago, Zach wrote that “Anti-ESG doesn’t have to win in the courtroom to win in the boardroom. The perception of risk is enough to influence behaviors even if that risk is illusory.” How right he is – but the speed and magnitude of the about-face by companies and some regulators is taking many by surprise. This came up last week with Advisory Board member Rhonda Brauer in a call preparing for next week’s Practical ESG Conference. Rhonda, Norton Rose Fulbright partner Carsten Reichel and I will be on a panel moderated by Zach called “Anti-ESG: Practical Steps to Navigate the Crosshairs.” I won’t spoil the presentation, but here are a couple very recent examples that show attacks to different aspects of ESG credibility.
First, Shell Oil reversed its previous business strategy on climate:
“Six months after becoming the chief executive at Shell Plc, Wael Sawan quietly ended the world’s biggest corporate plan to develop carbon offsets, the environmental projects designed to counteract the warming effects of CO2 emissions. In an all-day investor event in June, Sawan laid out an updated strategy for the European oil major that included cutting costs and doubling down on profit drivers like oil and gas. “
On a different front, Indonesia is doing their best to throw shade on the concept of sustainable finance. Under the Association of Southeast Asian Nations (ASEAN) Taxonomy for Sustainable Finance regulation, the country is interpreting the mandate to say that coal-fired power plants can receive sustainable finance if they pursue early termination and transition from coal. According to Indonesian news agency Antara:
“Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Mahendra Siregar stated that he was revising the green taxonomy rules that had been issued earlier… coal-fired power stations are counted as green ‘while coal-fired power plants are in the process of energy transition’, he said… ‘building new and renewable power plants does not necessarily require the early termination of coal-fired power plants. The ASEAN Taxonomy Board on Sustainable Finance has recognized or ratified that early termination of the coal-fired power station can be considered green, even though it is not related to renewable energy construction,’ Siregar remarked.”
These are only two examples that may bring the credibility of ESG into question – there are plenty more from other entities and organizations, and I’m sure more are coming. Confusion and a real feeling of uncertainty may begin to roost in the minds of those with ESG and climate jobs. But as I’ve said in the past, the best thing ESG professionals can do is ignore the noise, political posturing and distractions and simply continue doing your job well.
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