Future Focus: Trends in ESG, Sustainability, and Innovation
Joanna Buczkowska-McCumber
Helping Companies Grow in the Climate Future | B Corp CEO | Impact and ESG Strategist | Lecturer | Podcast Host
As greenwashing regulations ramp up, Europe and Canada are working towards laws that will regulate environmental claims across the business community, aiming to hold companies accountable and prevent greenwashing. In Europe, the EU Green Claims Directive seeks to standardize how companies substantiate and communicate their environmental claims, ensuring they are accurate and verifiable.
Similarly, Canada is introducing legislation C- 59 that attempts to curtail greenwashing across industry in Canada by mandating clearer labeling and transparency in environmental advertising and communication, striving to protect consumers and the environment from misleading claims. These legislative efforts mark a significant step forward in ensuring that sustainability claims are genuine and impactful.
“A majority of Canadian consumers surveyed for the report published Thursday said they don’t believe most “green” or sustainability claims they see coming from brands, with 57 per cent of people sharing that view. A quarter of respondents expressed frustration at how difficult it is to assess which claims are authentic.”
While some regions make significant progress, many eyes are on the US, where recent Supreme Court decisions have challenged environmental regulations. Notably, the dismantling of the Chevron Doctrine could lead to a massive reduction in federal agencies' ability to set environmental regulations. As elections in the US loom, many worry about the potential impact of those on environmental protection, regulation, and progress in the coming years.
This Summer 2024 Impact Brief delves into the evolving landscape of Environmental, Social, and Governance (ESG) practices over the past 20 years, highlighting key milestones, successes, and ongoing challenges. We also dive into the Theory of Change for businesses, and provide the latest updates on both advancements and setbacks in the field of sustainability.
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Regulatory News
Did you know ESG turned 20 in June?
ESG: A Brief History
The modern roots of ESG trace back to the early 2000s when ESG criteria began to take a more defined shape. From mere concept, to ESG’s coming-of-age two decades later, ESG has evolved into a mainstream framework that’s reshaping businesses, investing, and policymaking.
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But let's start at the beginning, The term “ESG” was popularized in 2004 by the landmark study “Who Cares Wins,” initiated by the United Nations. This report argued that embedding environmental, social, and governance factors into capital markets made good business sense and could lead to more sustainable markets and better societal outcomes.
The mid-2000s saw the launch of the Principles for Responsible Investment (PRI), another UN initiative that encouraged investors to incorporate ESG factors into their investment decisions. By the 2010s, ESG had gained significant traction, driven by a growing body of evidence linking strong ESG performance with financial performance. High-profile corporate scandals and climate related disasters further underscored the importance of ESG considerations when evaluating a companies risk profile.
In recent years, ESG has become a buzzword in boardrooms and investment circles alike, even for startups and SMEs. The COVID-19 pandemic and the increasing urgency of the climate crisis have only accelerated its adoption. Today, ESG criteria are integral to the strategies of major corporations and investment funds around the world. They are not just a set of guidelines but a comprehensive approach to business that balances profit with purpose and short-term gains with long-term sustainability.
The rise of sustainable finance, the boom in green bonds, and the embrace of stakeholder capitalism all bear testimony to ESG’s influence. Governments and regulators have hopped on the bandwagon too, crafting policies that push ESG to the forefront. In Europe, the EU’s Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD) are setting new standards for transparency and accountability including the Green Deal. The U.S. Securities and Exchange Commission (SEC) is also stepping up, with proposed rules to enhance and standardize climate-related disclosures. Canada is aligning its regulatory framework with global best practices, ensuring that ESG considerations are integrated into corporate reporting. Whether you like the acronym or not, it represents progress in our prioritization of environmental and social issues, voluntarily or not.
ESG STATS WORTH KNOWING
In the News
Googles emissions surge by 13%: How can we Make AI and Data sustainable? - Sustainability Magazine
Canadian Companies Making Big Investments into Green - Corporate Knights
First Meat Tax in Europe - Microsoft
Food Prices Pushed Up by Growing Climate Events - Financial Times
Air Freight GHG Emissions up 25% since 2019 - The Guardian
Want to explore more how to make impact through your business? Read our article on Why Your Business Needs a Theory of Change and Make sure to download our Theory of Change Guidebook