Bioénergétique : Libre accès

Abstrait

The evolution of the relevance of environmental, social and governance (ESG) factors as a new way for creating value in the economy

Elena Rusci

Climate change, low carbon emissions, and human rights protection are common areas of focus in the global economy and these challenges are increasingly gaining attention among the financial services industry, businesses, and institutions and more broadly among the public opinion. In recent years, numerous industrial sectors have undergone structural change, creating new markets, business and employment opportunities, besides undertaking innovative business models able to create profit not at the expense of people and the planet. Today, three out of five businesses worldwide use the Global Reporting Initiative Sustainability Reporting Standards (GRI) to communicate their environmental and social impact, either within their annual report or through other documents such as the Sustainability Report. The GRI’s framework gives businesses a method for communicating with investors and other interested stakeholders about how they measure and manage their social, human and financial capital, besides their impact on the natural capital. When reporting on sustainability topics, managers ask themselves not only how to make a profit but also how to minimize their impact. This new trend shows that climate and economy are intimately linked both for companies and for investors. Today, managers operating within the market ask themselves how to better manage risks and opportunities coming from the transition to a low carbon economy. Financial institutions on their side, have been working on implementing sustainability requirements into their internal systems and investment decision-making process as done by the European Commission, who has taken the lead internationally by re-orienting capital flows towards a more sustainable economy. Nearly all investors who responded to a survey conducted from EY in 2018 stated that they evaluate a company’s nonfinancial disclosures. The main factors considered in their investment decision-making have to do with risks related to governance, supply chain, human rights and climate change. Investors’ increasing demand for reporting on nonfinancial assets reflects a more sophisticated understanding of the link between performance and environmental, social and governance topics (ESG). In other terms, sustainability has evolved from being an operational concern to a more strategic stance. If in the beginning, sustainability was seen as an operational concern, consisting of largely defensive effort to reduce companies’ environmental footprint and cut waste, today it has evolved into a more strategic stance, from cost reduction to innovation.