ESG AND CLIMATE RISK MANAGEMENT: THE ROAD FROM COMPLIANCE TO OPPORTUNITIES
R&C: Could you provide an overview of recent trends around environmental, social and governance (ESG) and climate related risks, regulations and opportunities? Are you seeing these issues ascend to the top of the corporate agenda?
Cenk: A central strategy around sustainability is one of the top agenda items for a range of corporates, including financial services. As the world is going through turbulent times from an economic, climate, political and social perspective, building robust businesses that are sustainable in the long term should be a central criterion for all decisions. Increasing sustainability is perhaps the most important aim of the environmental, social and governance (ESG) related regulations which have been introduced in recent years, and we expect more regulations to guide corporations in this direction. It is also encouraging to see the consolidation work being carried out by the International Sustainability Standards Board (ISSB) and other regional authorities around sustainability-related disclosures. The recent publication of the European Union (EU) Corporate Sustainability Reporting Directive (CSDR) is a further example of the intensification of regulation to disclose more on ESG-related matters.
Scalpelli: The world is increasingly focused on ESG issues, as well as on climate change related risks. Furthermore, there is increased attention being paid to climate change by regulators, banks and the wider business community. There are different reasons for this heightened interest. First, climate change related risks are becoming more material and have the potential to impact companies’ financial performance. Second, there is a growing recognition that these risks need to be managed in a proactive and holistic manner, integrating them into companies as ‘business as usual’ (BAU). And finally, there is an increasing awareness of the opportunities that can be generated by addressing these risks and vulnerabilities.
Jan-Mar 2023 Issue
SAS