July 13, 2023

Themes in ESG: Conversations with our clients

Hogan Lovells

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Hogan Lovells

Last week Sharon Lewis, Arwen Handley, Rita Hunter, Bryony Widdup and Emily Julier had a wonderful evening with some of our female senior clients where we shared ideas and opinions on ESG-related topics over a leisurely meal. The themes that arose during the evening were insightful and we are keen to continue the conversation with you to make an impact. The main themes of the conversation are set out below.

ESG has to be integrated into the purpose and the business model of a company and designed into the business processes.
ESG is a horizontal matter – all the members of an organisation need to understand how ESG is integrated into business practices and live it. Risk arises where employees are “out on a limb”, don’t communicate with those who know more about ESG and do not fully understand the ESG implications in their role. At an organisational level, it is important for businesses to drive their own narrative, not live the narrative provided by the press.
ESG regulatory risks came up time and time again. There were concerns about the lack of harmonisation of regulations globally. International rules would be very helpful in driving consistency but, of course, they are only effective if all countries adopt them.
ESG education – this comes up repeatedly within organisations, in the financial markets and in society generally. Biodiversity restoration and regeneration and natural capital are relatively new business concepts (though they have been present in the scientific community for a long time) but they form a large part of the solution to climate change (as well as many other planet-related issues). In a world where the term “ESG” has been redefined to mean “woke”, biodiversity and nature can bridge the imagination gap and can be used to engage people on a human level.
It is an old one but an important one: diversity is essential to meet the challenges of the climate change and biodiversity loss inside the board room and outside. We know that it is the allocation of capital which will finance this transition. A very small percentage of capital is allocated to women. This needs to change for a successful transition.
One last thing – we can use our power not just in the board room or within the financial markets, but to make our choices count. The financial investment and consumer decisions we make can have impact.

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