The ever increasing importance of ESG
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Bloomberg Media’s Duncan Chater, head of sales, Europe, looks at the growing emphasis on environmental, social and governance issues and outlines how businesses need to respond
In the 20+ years I’ve worked in the media industry change has been a constant, but I know I’m not alone in recognising a noticeable shift in gears in recent years as business has evolved at pace. Annual restructuring and repositioning have become commonplace in order to keep pace with an ever-evolving industry.
Last year, the rate of change was intensified with the onset of Covid-19 impacting all industries, all around the world. For many businesses, it has turbocharged modification: in some cases, initiatives that were already underway have been pushed through at pace, while other companies have had to conceive new strategies and implement them quickly in order to compete more effectively.
Our experience in 2020 created an even greater awareness of the problems we need to face head on, amplifying a number of issues that existed long before the pandemic began – from racism and inequality, to climate change and sustainability.
In a pre-Covid world, many of us will have been aware of the growing attention and importance of “Environmental, Social and Governance” issues – more commonly referred to as ESG – for our businesses. Today’s consumers are increasingly looking for companies to take a stand.
By orienting efforts around an authentic, purpose driven message that’s rooted in action, businesses will build deeper relationships with their audiences for the long-run and ultimately drive financial performance. As we embark on a new year, I am certain that an authentic approach to ESG will play an even more prominent role.
As consumers we are starting to make choices, favouring companies that have a clear purpose and are contributing to social and environmental development.”
Consumers, partners and employees alike are all demanding high standards of sustainability, and actionability around equity and inclusion. Regulators and policy makers are more interested in ESG because they need the private sector to help them solve social problems such as environmental pollution and workplace diversity. And the investor community has also become much more interested, as there are strong links to ESG performance and financial results.
There’s a similar link on the business-to-business side. For example, if you are looking to be a supplier to one of the world’s largest retailers, then you need to have a strong sustainability proposition on plastics, packaging and water use.
ESG is also playing a role in retention and recruitment, as employees are demanding more purposeful work. If you are an employer that can meet that need, you will attract and retain that talent, and likely see higher productivity in the workplace.
As a consequence, there is a growing emphasis, on both companies and investors, on assessing resiliency to climate change through reporting on financially material ESG metrics. Independent industry measurement boards have been launched to help offer a reporting framework and guidance for business to collect meaningful data and chart their progress through annual reports.
An example of this is the Task Force on Climate-related Financial Disclosures, or TCFD, which provides a framework for companies to disclose information on their climate-related financial risks and opportunities.
More companies are driving their influence to impact change. Goldman Sachs said in July 2020 that they would only underwrite IPO’s in Europe and the US for companies with at least one diverse board member, and at least two in 2021.
Companies are also introducing, or have introduced, new roles such as ‘Chief Sustainability Officer’ and ‘Diversity and Inclusion Officers’ to steer and shape their strategies for the future.
However, meaningful action and authenticity is required to deliver meaningful results. At Bloomberg, we provide a number of solutions to help investors integrate ESG throughout the full investment process and standardise company-reported and third-party ESG data.
These solutions include data, scores, analytics, indices, news and research workflows built specifically for investors around ESG.
Bloomberg also offers gender-related metrics from public listed companies that participate in the Gender-Equality survey, providing a comprehensive look at their investment in workplace gender equality and the communities in which they operate in.
As consumers we are starting to make choices, favouring companies that have a clear purpose and are contributing to social and environmental development. This continued focus and expectation will increase effort, action and communication volume from companies around ESG in 2021.
Our Bloomberg Intelligence division similarly provides insight and analysis into the growing influence of ESG.
According to Adeline Diab, Bloomberg Intelligence, Head of ESG and Thematic Investing EMEA, “Global ESG assets are on track to exceed $53 trillion by 2025, representing more than a third of the $140.5 trillion in projected total assets under management, we estimate in our 2021 ESG market outlook.
“A perfect storm created by the pandemic and the green recovery has revealed how ESG can help assess a new set of financial risks and harness capital markets to address global challenges.”
At Bloomberg Media, we have been chronicling and covering these critical issues from our newsroom, while also seeing significant growth from ESG related partnerships in 2020 as we continue to expand our platforms.
Bloomberg Green launched in January of last year as a global multi-platform editorial brand focused on climate change news, analysis, and solutions. Our landmark event in September brought together leading influencers across the world such as Matt Damon, Bill Clinton and Bill Gates, and we’ll being doing even more to grow Bloomberg Green in the year ahead.
We’ll also look to expand the Bloomberg Equality franchise in 2021, on the back of our successful global event series.
So much has changed last year, but one trend will remain the consistent in 2021: ESG is on the minds of consumers and businesses alike, so be prepared.
Duncan Chater is Head of Sales, Europe at Bloomberg Media