Many of our clients have asked for more information on ESG, so if you have questions, you are not alone. Here’s a quick summary:
ESG, or Environmental, Social and Governance, is essentially an investing framework that brings a broad range of what have traditionally been considered “non-financial” factors into financial decision-making. While the current lack of standardization (though this is expected to change) can make ESG seem amorphous, another way to think about it is that ESG expands corporate accountability beyond shareholders and to include external stakeholder expectations on a variety of factors such as climate change, use of consumer data and racial justice (among many others). These factors are often reported publicly, and in today’s market, we believe that ESG analysis is a key risk management strategy for at least two reasons:
The rise of ESG is already expanding traditional fiduciary duties, as industry leaders like BlackRock continue to take increasingly strong positions on climate and related issues.
The Securities and Exchange Commission is taking action in the ESG space by, for example, creating new, senior level ESG roles and a Climate and ESG Task Force in the Division of Enforcement.
This means that ESG reporting is likely to become (1) increasingly mandated and (2) standardized. And a variety of entities will be asking for this information from their service providers, clients and business partners.
The bottom line: failing to get smart on ESG exposes companies to a variety of risks.
In a recent Public Statement, the SEC echoed many of the risk identification and management strategies we advocate for, including the importance of innovation and the cost of inaction:
“Going forward, I believe SEC policy on ESG disclosures will need to be both adaptive and innovative. We can and should continue to adapt existing rules and standards to the realities of climate risk, for example, and the fact that investors increasingly are asking for ESG information to help them make informed investment and voting decisions. We will also need to be open to and supportive of innovation – in both institutions and policies on the content, format and process for developing ESG disclosures.”
If you need support, reach out. We help businesses understand, and manage, a variety of ESG risks and opportunities.
Our latest article, What I Wish You Knew About Sustainability, was just published in The Ascent. After working in the sustainability space for more than a decade, there are a few themes that consistently rise to the surface. I value a practical, accessible approach to sustainability and wanted to share not only these themes, but also the individual action that can help eliminate common roadblocks and drive sustainable change.
Here are the top things I wish everyone knew:
Clear language is incredibly important.
Companies are constantly competing for your “green” dollars.
Recycling is a complex topic that requires a hands-on approach.
Learn more by accessing the full article below.
Many colleagues know that I take every opportunity to explore new places and in particular new and innovative forms of real estate. And I’ve been encouraged to share insights from those explorations. I recently took a trip to Bend, Oregon, to check out some adaptive reuse in the lodging sector; a theme I’m seeing more and more frequently. I’ll share more in later posts, but for now, here’s a photo I took of the Deschutes River, as it runs through Bend.