Recently public concern has intensified in all facets of ESG, and various stakeholders are demanding that the financial services sector act on addressing ESG concerns and provide transparency on their approach. There is increased interest by regulators, investors, standard-setting bodies and rating agencies, the United Nations and the European Commission on ESG initiatives. Societal issues, climate-related risks and the need for transitioning to a net-zero economy are key discussion topics among leaders in the financial sector.
Public statements made by leading investors like Blackrock regarding shifting focus on sustainability and ESG have further heightened interest and action by companies. As an example, during COP26 450 financial firms across 45 countries with total assets of US$130 trillion made pledges to reduce the CO2 emissions of their loan and investment portfolios to net-zero by 2050. Investors are now integrating all aspects of ESG in their investment criteria and asking for ESG strategy and reporting.
The pandemic brought the “S” in the ESG to the forefront, with concerns around racial injustice, financial inclusion and instability, and protecting the workforce and their communities. These pressing issues are now becoming part of the strategic priorities for financial institutions.