Your guide to ESG: What businesses need to know | Free download

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ESG – Environmental, Social and Governance – is the hottest acronym in the business world today. Global businesses are no longer working on environmental, social and governance issues in a silo. They are bringing them together under the banner of ESG to demonstrate the positive impact the business is having on the world. 

By combining issues like carbon emissions, progressive hiring practices and strong compliance, businesses can show not only are they a sound investment, but they have a net positive impact on the world. ESG is about assessing that net positive impact in the world, and taking concerted, defined and measurable action to improve it. 

VinciWorks has created a comprehensive guide about ESG that explains what it is and advises businesses on all they need to know and what steps they can take to work towards becoming ESG compliant.

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What happened at the first week of COP26?

What happened at the first week of COP26?

New ESG regulations and net-zero commitments from Glasgow

COP26 is now entering its final week, but many major pledges have already been announced. The chancellor, Rishi Sunak, announced that most big UK firms and financial institutions will be required to publish their net-zero plans in line with the UK’s environmental disclosure framework: TCFD. With the ‘E’ part of ESG gathering significant attention at the Glasgow conference, it seems the UK is moving towards a regulated and mandated ESG disclosure framework. 

The announcement by the Treasury means companies will have to set out detailed plans for how they intended to meet the UK’s goal of net-zero by 2050. Commitments though will not be mandatory, and it will be up to firms and shareholders to decide how to adapt to a low carbon future. The requirement is on the publication of the plans, with the aim of letting the market decide which plans are credible. 

The Glasgow Financial Alliance for Net Zero (GFANZ) led by former Bank of England governor Mark Carney says more than $130trn (£95trn) of private capital “is now committed to transforming the economy for net zero.” In practical terms, this means financial institutions divest from highly polluting industries like oil fields and coal mines, and instead invest in renewable energy or provide a mortgage product that subsidises highly efficient homes.

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COP26: Early spotlight on supply chain due diligence

World leaders likely to make more ESG reporting mandatory

Prime Minister Boris Johnson and President Joe Biden at the UN Climate Change conference in Glasgow

COP26 might be experiencing its own logistics problems, with delegates queuing for hours to get in and a foreign energy minister unable to access the venue because she is a wheelchair user, but the early spotlight at the conference has fallen on supply chains. Already one of the key takeaways from the global climate summit in Glasgow will be a need for businesses to pay much closer attention to supply chain due diligence as countries commit to more mandatory ESG reporting.

World leaders agreed a significant deal to tackle deforestation, committing billions of funding to restore degraded land, protect forests and mitigate damage. The UK is already pushing ahead with regulation to tackle deforestation. The Environment Bill currently going through parliament includes provisions to require large companies to undertake supply chain due diligence and report on the risks of deforestation in their supply chains. 

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COP26: UK to mandate climate related company disclosures from April 2022

UK first G20 country to require ESG reporting on TCFD

  • Taskforce on Climate-Related Disclosures to become mandatory

Ahead of COP26, the UK has announced it will become the first country to pass legislation to mandate climate change TCFD disclosures for Britain’s largest companies and financial institutions from April 2022. The Taskforce on Climate-Related Financial Disclosures (TCFD) is an environmental reporting framework which helps companies report consistent climate risks and opportunities, forming part of a broader effort to standardise ESG reporting which is only likely to increase after Glasgow.

The new requirements will come into effect on 6 April 2022, and require over 1,300 of the largest UK-registered businesses required to disclose climate-related financial information. This will include many of the largest companies, including banks, insurers as well as private businesses with over 500 employees and £500 million in turnover.

TCFD is an industry-led group which helps investors understand the financial impact of climate risks. It was launched at COP21 in Paris in 2015, and the adoption of it as part of the UK’s company disclosure information will help ensure the largest companies are required to think seriously about the risks of climate change. They will have to consider emission reduction plans and sustainability programmes, and go beyond paying lip service to the UK’s net-zero commitments.

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ESG reporting frameworks: which one to choose?

A quick start guide to ESG standards

Far from a buzzword, ESG is fast becoming the standard for businesses to manage and report on their risks.

ESG Reporting Frameworks: An Overview

ESG: environmental, social and governance, are essentially the broadest set of factors which can be used to measure a company’s impact in the world. Regarding environmental impact, how is a business impacting the environment, deforestation, pollution and climate change? On the social front, how are they supporting communities? This includes both their employees, through health and safety measures and diversity, and also the wider society that they operate in. And on governance, how well is the company run, how diverse is its board, does it have strong anti-corruption policies and good management structures?

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