“What The Boards Should Know Regarding ESG and Climate Change in Particular”

An Executive Report by TT Impact Services

To request the full report, please email Anj at anj@toptierimpact.com

Abstract

Despite the unprecedented shutdown of the global economy impacting many businesses financially, the focus on ESG has increased. The social inequalities highlighted by the pandemic are bringing focus from investors and various stakeholders with expectations from companies to do better. Doing well on ESG factors is increasingly seen as a sign of resilience and good stewardship. There is also a genuine attempt to create a global ESG standard and a clear push by regulators to introduce ESG legislation, such as the EU’s Taxonomy and the UK Government making climate-related financial disclosure mandatory through TCFD. There is an immense focus on climate change. Governments around the world are declaring policies around ‘Build Back Better’ including becoming Net Zero - as demonstrated by recent announcements from the EU, UK, China, Japan and South Korea. The looming energy transition is clearly pointing to the biggest structural overhaul of the global economy to ever take place in history.

To analyse and to deeply understand the impacts of these mega-trends and structural changes on a company’s strategy and its future cash flows, boards need to use scenario planning as a strategic tool to navigate their companies through this increasingly turbulent and novel environment.