ESG
“ However, we need to focus more on building out the financial business case for change, which is not difficult when you look at the potential costs of inaction. We need to work out how to quantify this at a company and a country level.”
Focusing on internal business value is important because regulatory landscapes outside Europe are fragmented. Since a single global ESG framework is unlikely, global firms should base their strategies on principles like transparency, documentation, and clear use cases.
Geoffroy suggests that developing a repeatable internal process for interpreting data across jurisdictions is the most effective course of action.“ The central risk is the belief that using a third-party ESG rating transfers accountability. It does not,” Geoffroy says.
“ Even with ESG ratings providers now falling under ESMA supervision, asset managers ultimately remain fully responsible for how ESG data and ratings inform their investment decisions, product design and client disclosures.”
To initiate this strategic transition, leadership teams must confront the baseline financial realities of their operations. When evaluating climaterelated investments, Simon states that the opening conversation between a chief executive and the board must focus entirely on value protection and creation.
“ Do we understand how climate change will potentially destroy or drive value across our business and what is the cost of inaction?” Simon asks.
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