What is ESG and Why It's Important to Concrete Sustainability
What is ESG and why would it have a trend? To keep things simple, ESG is an acronym for Environmental, Social and Governance. What we typically refer to as sustainability, ESG is the terminology used in the investment and financial market sectors and is working its way into a company’s vernacular, reports NRMCA Vice President, Sustainability Initiatives, James Bogdan.
There has been an increase in ESG reporting because investors equate a higher quality of management in companies that engage, measure and disclose ESG practices and therefore have better performance than their respective marketplaces (note that studies indicate this, but it is still too early to confirm). ESG performance is not limited to publicly-traded companies as it has benefits for all companies regardless of size. S&P Global, a financial market intelligence company, recently released its 2021 ESG trends to consider. You can read the report here. A summary is below:
- In response to demand and regulatory drivers, the quality and quantity of ESG data will continue improving. Many countries and supervisory authorities begin to require climate risk disclosures.
- The new Biden Administration will reinvigorate ESG policies and climate urgency in the U.S., bringing a significant change in tone on addressing climate risk.
- Threats to nature and biodiversity will take centerstage in ‘E’ discussions. The majority of company business models align with the United Nations Sustainable Development Goals (SDGs), but less than one percent of business models align on growing threats to nature and biodiversity.
- With a growing global urgency around climate, conversations about the energy transition will become increasingly nuanced. Countries representing around 70% of the world's economy will have committed to reaching net-zero emissions or carbon neutrality.
- The nature of transition conversations will shift from climate mitigation to climate resilience. As the planet looks to “build back better,” we expect climate risk conversations to include more discussion about adaptation and climate resilience.
- Investors will continue pressing companies on social issues, particularly around COVID-19, worker safety and diversity. With the pandemic, social unrest, income inequality and worker safety, the ESG conversation will evolve as investors, corporations and the public give more priority to social issues - the ‘S’ in ESG.
- Social issues will gain traction in global policy discussions, too. S&P Global is also seeing social issues coming to the fore in policy worldwide.
As part of the Build With Strength campaign, NRMCA promotes Strength Through Transparency for member and industry competitiveness in the green building marketplace and the trends toward product and company transparency.
For more information, contact James Bogdan at firstname.lastname@example.org or 412-420-4138.