The rise in sustainability as a trend has created driven growth in the ESG industry at large. ESG consulting services are on the rise as the demands for report generation, investment opportunities, and understanding of key elements that drive sustainability at large are also showing noticeable growth.
ESG advisory services are predominantly used to find the right ways in which organisations can invest in building a sustainable company as well as promote environmental friendliness as a part of their core values. These strategies and investments have to help drive business growth as well, and they have to align with the company’s vision and mission as an organisation.
So what are the most important and noticeable trends observed with ESG advisory services that drive the Environmental Social and Governance agenda of 2022?
Prevention of Greenwashing Among Corporations
Greenwashing has been a growing trend in large enterprises. Companies often do not want to make lasting changes to their existing operations even if it is for a greener, more sustainable future. This is why they choose to falsify or modify their reports as a means of leading their stakeholders to believe that they are greener than they actually are. This misdirection or lack of information provided to stakeholders about the company’s environmental impact and sustainability measures is known as greenwashing. ESG consulting services have to work to ensure companies are investing in tools and developing strategies that are truly impacting the environment positively, and it is more than a marketing gimmick. Creating a balance between business growth and sustainability is a growing ESG concern and trend in 2022.
Increase in the responsibility of the government sector to improve their ESG efforts
Besides corporations, the government sector is also facing more responsibility in 2022 to improve their ESG efforts as a whole. Governments lead the way to creating long term change in their region, and once they take on more of an effort to build better strategies, their states will follow suit. People are becoming more aware of the responsibilities and duties that their governments are supposed to fulfil, and not just for their environmental sustainability. They are being held responsible to show transparency in their processes, and it is a fiduciary responsibility to show the citizens with due diligence their financial reports, budgets, and allocation of resources. The rate of activism in individuals and those working at government organisations saw a hike in the last two years as people started holding their governments responsible for their mismanagement of the COVID-19 crisis, the poor resource allocation, failure to build proper infrastructure, and more.
Updates in the reporting standards and regulations for ESG reporting
Since the stakeholders are becoming more aware of all the concerns regarding the existing ESG reporting processes in place, there are reforms underway for corporations in all industries in 2022. There will be regular updates to the ESG reporting standards that companies will have to follow. ESG advisory services can assist organisations at creating insightful and accurate reports of their ESG efforts which are in line with all the newest rules and regulations. Failure to do so can violate compliance guidelines of the organisation and can result in hefty fines for the company. There is already a Sustainability Standard Board in place that is responsible for maintaining and updating these regulations and checking if the reports sent in are compliant to the updated regulations.
Meeting the net zero requirements
The primary concern for governments around the world is to meet the net zero carbon emissions requirement by 2035, based on the Paris Agreement. Since the pandemic, it has gained even more importance, and countries around the world are amplifying their ESG requirements to be able to meet the quota in time. Developing countries will have a harder time at minimising their emissions rate because of their high industrial usage of resources, but developed countries are coming up with innovative technology that can be used by them as well as the developing countries to make the world a greener and cleaner place to live in.
Final Thoughts
ESG services offer companies the right assistance with meeting their ESG requirements, avoid making any greenwashed investments, and focus on creating detailed and insightful ESG reports for their stakeholders. The biggest trend of 2022 is the rise of the informed stakeholder who is not afraid to hold the companies he or she associates with or invests in accountable for their environmental, social, and governance responsibility.
