On the one hand, we are seeing the ESG agenda gaining greater influence, with governments including Singapore, Japan, Brazil, Canada, India, United Kingdom, Australia and Mexico enacting new corporate sustainability disclosure regulations. At the same time, the European Securities and Markets Authority is pressing ahead with enforcement rules relating to the EU’s corporate sustainability reporting requirements. Even in the US, California overturned a legal challenge brought by the U.S. Chamber of Commerce against the introduction of a new law requiring large companies to disclose value chain emissions and climate-related risks.
On the other hand, there are expectations that the newly re-elected US President Trump will withdraw from the Paris Agreement – again – and add further fuel to the anti-ESG fire taking hold of US corporate board rooms.
I asked Dr Marc Lepere, head of ESG at King’s Business School and lead of the Hospitality ESG Executive Education Programme, if there was a difference between politicians and regulators and what investors should expect? He responded: “Absolutely” He explained that this is a distinction that matters now more than ever. There is a great deal of anti-ESG and sustainability noise coming from politicians and it is on the increase the world over. However, it’s necessary to separate that noise from the very real actions of policymakers.
Politicians' rhetoric against sustainability masks the regulation that is being enforced by regulators such as the European Securities & Markets Authority (ESMA) and the Financial Conduct Authority (FCA), working with standard-setters like the International Financial Reporting Standards (IFRS). He concluded: “The industry will be better served by focusing on the scientific and substantive changes taking place rather than being lured into a false sense of security by superficial rhetoric.”
One of the most substantive changes taking place is the historic collaboration of securities and markets authorities of 130 countries around the world to create uniform sustainability reporting standards. The direction of travel is towards audit-grade sustainability disclosure of information that is financially material to investors and organisations. The Tsunami seems to be at a point that is unstoppable and it’s therefore critical that senior executives in the hospitality industry are upskilled and prepared for the new ESG-driven rules of doing business.
By Ufi Ibrahim
