Key Takeaways from our Inspiring Business Leadership for a Sustainable Future Panel
Linklaters hosted New York’s business leaders for an evening focused on sustainability and ESG. The event was kicked off by legendary polar explorer and climate change leader Robert Swan OBE, the first person in history to have walked to both North and South Poles, who discussed his experiences at the poles and the very real threats posed by climate change. He was followed by a panel discussion with leaders in the ESG finance space sharing practical things their organizations are doing to make a difference and the role business leaders have to play in transitioning to a sustainable future — considering both the challenges and opportunities the net zero transition presents. The panel included Ravina Advani, Head of Energy Natural Resources & Renewables Coverage at BNP Paribas, Brooke Guven, Head of ESG and Sustainability at Cerberus, and Emily Rose Laochua, Head of the Sustainable Advisory Group at Bank of America, and was moderated by Linklaters' Lauren Bachtel, Senior Counsel in our Energy & Infrastructure practice.
The top five takeaways from the discussion can be found below:
1. ESG makes financial sense. Large financial institutions are taking short-term losses for long-term gain, recognizing that if actions are not taken now to address climate change, revenue streams and balance sheets will be impacted down the line. They are prioritizing ESG values and concerns and are going as far as decarbonizing their lending and investment portfolios by exiting fossil fuel companies other sectors that do not share the ESG values. At the same time, large financial institutions are investing heavily in cleantech solutions, with a rising interest in carbon sequestration and green hydrogen technology in particular. ESG considerations are prioritized as “simply making good business sense” and this approach and internal rigor avoids the need for institutions to constantly adapt and reinvent internal policies in light of changes in regulatory requirements.
2. All leaders recognize the need to act. All leaders, including politically conservative asset managers and investors, now understand that climate change is financially material to their businesses, with particular concerns around supply chain risk. There is a focus on adopting more sustainable practices by focusing on the real financial impacts of climate change, sometimes even omitting the unfortunately politicized terms “ESG” and “climate change” if necessary.
3. Data collection incites healthy competition. As part of their ESG programs and policies, some asset managers are implementing data collection policies across their portfolio companies. This includes data collection on greenhouse gas emissions and training the appropriate personnel on such data collection, including CEOs and CFOs. Data collection alone can induce competitive behavior, encouraging those same c-suite executives to improve their emissions data year over year. In addition, quality data can help companies identify sources of emissions and is necessary to appropriately tailor expectations when setting internal policies and goals.
4. Prioritizing ESG will outlast a change of administration. Investment professionals recognize that ESG is here to stay and is simply the new way of doing business. Investment professionals are increasingly aware that clients and investors have ESG expectations regardless of regulatory requirements. As such, even if the upcoming election results in a change of administration, we will continue to see companies and large financial institutions prioritize ESG. In addition, to prevent ESG progress from falling off a 2030 cliff, which is a widely known benchmark, companies must re-evaluate their commitments ahead of the benchmark and develop long-term plans despite of political noise.
5. Emerging markets are the next frontier for ESG. In the short term, there will be increasing focus on disclosure and reporting for companies that are already exposed to ESG regulation and policy requirements. In the longer term, we will see companies in the emerging markets embrace and prioritize ESG. It will be interesting to see what commitments are made at COP28 in Dubai later this year and whether this will begin the transition of ESG policy into the emerging markets.
Linklaters' market leading ESG team is experienced in advising clients on transition strategies, risk management, climate and ESG-related disclosures, and governance frameworks to support organizational change across industries and geographies. Learn more about our ESG offering.
