During the last few years, ESG has been a hot topic. Now as there’s more pressure for businesses to commit to ESG and sustainability, it cannot be ignored. 

What is ESG and why is it important? 

ESG simply stands for Environmental, Social and Governance. It’s a framework used by companies to drive their strategy and measure their performance in these three key areas. 

A strong ESG profile and correctly measuring data is attractive to potential investors, lenders, employees, and customers. It helps improve reputation, builds the brand of an organisation, and will improve its relationship with all stakeholders – from investors to customers.

Now you know a bit more about ESG, here are our top three trends to watch out for in 2022… 

Reporting 

Previously, one of the main challenges for businesses has been the lack of clarity, uncertainty and sometimes frustration surrounding reporting. One reason for this has been the absence of a unified global ESG standard, leading to challenges with comparability of and presenting data. 

This uncertainty and failure to publish data often results in a lack of transparency. However, now with requirements growing and more stakeholders demanding that companies report on their ESG impacts, it’s vital for all to correctly measure and report data.  

You’ll be pleased to hear that now, in 2022 the next phase of ESG seems to be quickly unfolding with the publication of global frameworks. This includes the: 

• EU Taxonomy 
• The Task Force on Climate-Related Financial Disclosures (TCFD) 
• Corporate Sustainability Reporting Directive (CSRD) 
• International Sustainability Standards Board (ISSB) 

Going forward, these new frameworks and requirements should help companies publish clear results and become more transparent with all stakeholders.

Not forgetting the ‘s’ in ESG 

Social issues have (and will continue to) be at the forefront of public discussion in 2022. This is due to the pandemic and the Black Lives Matter movement. Both exposed systemic social problems – this includes those in the corporate world. 

In the past, issues such as diversity, how a business engages with key communities, or how companies treat their staff were often left behind as they’re harder to define and measure. However, now many investors will only consider those who pay attention to social issues and will scrutinise the way companies treat their staff, suppliers, and customers. 

There’s already been positive change. For example, following the pandemic, we’ve seen some businesses take their social responsibility seriously by putting people at the centre of their agenda. This includes providing mental health support, investing in skills, training, and development, or creating a more inclusive environment. Those who adopted their business models (and have kept this in place) have gained a positive reaction and built trust with both employees and investors. 

Food & biodiversity – how food production is changing 

Food production and biodiversity conservation are in conflict. It’s clear that if we don’t drastically change our food production and eating habits, climate change and biodiversity loss will beat us to it. 

The COP26 Sustainable Agriculture Agenda and the targets of the upcoming UN Biodiversity Conference reflect an alarming reality. Our global food system is responsible for up to 30% of total GHG emissions and destroys more nature every year than any other industry. Already, climate change is threatening some of our much-loved luxuries such as cocoa beans, brazil nuts, wheat, chickpeas, and crops – do we really want to lose them for good? 

As our population is rapidly increasing, the challenge now for companies is how to produce more food for more people on smaller chunks of land and with less environmental impact. 

So, what’s happening to save our produce? Alternative methods such as vertical farming, regenerative agriculture, and the application of AI and robotics to agricultural operations that enhance water and energy-efficiency techniques are already being used and will continue to boom. 

Already popular with many, the production of alternative proteins made from plants, fungi or lab-grown meat will also continue to grow. These alternatives reduce dependence for grazing land and livestock to be raised, which in turn helps to decrease GHG emissions.  

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It may seem like a lot to take in but taking ESG seriously will make your business more investable, trustworthy and enhance its reputation. 

Looking for a Birmingham PR agency to support your ESG strategy? Get in touch with our communications experts today.