This author suggests governments should form regulations that will guide financial institutions to make sure the companies they work with are held accountable to environmental, social, and governance (ESG) standards, not just profits:
“At the nexus of all this sits the financial industry. Certainly, the leaders at COP 26 will have their sights trained on the role that financial institutions can and must play in unleashing the trillions of dollars in private and public sector finance required to secure global net zero emissions.
Beyond that, the financial industry has significant leverage over all commerce in the form of environmental, social, and governance (ESG) standards – and the investment decisions those standards drive.
Essentially a value proposition that assesses any company’s ability to safeguard and sustain long-term success through measures beyond their ability to generate profit and shareholder returns, ESG standards have the potential to influence the way in which any company thinks, organises, operates and behaves.
In traditional business thinking, ESG has been considered separate from the ‘core’ functions of a business; an important adjunct to investor relations, yet still too often regarded as the means to present an organisation’s ESG credentials rather than an opportunity to adopt new ways of working.
Yet, with a new line of investor thinking suggesting that those companies with the best ESG credentials are most strongly positioned to react to the exponential change they now face, there is an opportunity to put ESG at the heart of companies’ transformation initiatives.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group