Make ESG a strategic priority ahead of imminent regulatory change - report

Organisations that adopt and embed ESG factors into their business strategy are more likely to create value and accelerate growth, while minimising legal and regulatory risks, according to a joint report from law firm, Dechert, and global advisory business, StoneTurn.

The report, based on participant feedback at three events held by the two firms (polling 114 professionals over a two-month period) shows that, whilst integrating ESG and continually reassessing an organisation’s ESG strategy is a future-proofing investment, many firms have some way to go to meet increased ESG-related demands. Fewer than one in three respondents had carried out a risk assessment to identify ESG risks in their supply chain in the past two years, for instance, while 60% failed to integrate ESG due diligence into wider due diligence activities and compliance measures.

The joint report highlights how a failure to embrace and embed ESG into an organisation’s strategy and processes could have serious financial and reputational consequences, which may include litigation, regulatory action, and the restriction of access to capital as lenders start to charge higher premiums and interest rates to organisations with poor ESG risk rating. Markets are also responding, with stocks that have positive ESG ratings driving share price and dividend growth.

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