Make Haste
The clock is ticking.
A day after you read this there will be 100 million more tonnes of CO2 in the atmosphere. What’s more, the pace at which we are emitting it is increasing – the opposite of what needs to happen. Elsewhere, we are currently losing species at a rate over 1,000 times the background level. Society is also changing rapidly – boosted by the shock of a pandemic that exposed the fragility of our interconnected world while shining a spotlight on existing social issues.
Other, more positive, trends are seeing increased velocity. The response is also speeding up. The Index Industry Association reported a 40% increase in ESG indexes last year – a record increase. ESG bond issuance was up 227% in the second quarter of this year. ESG search term usage has doubled since 2018. As millennials benefit from intergenerational wealth transfer, this momentum will no doubt continue.
Clean energy investments also continue to break records. Last year the world allocated over $500bn to low-carbon technologies – 9% more than 2019. And that’s even as Covid-19 significantly impacted the global economy. A significant proportion of this was invested in renewable energy technologies, themselves seeing accelerating falls in price as economies of scale continue to increase their viability.
ESG is the new megatrend.
In turn, investors are increasingly demanding more, as sustainability takes centre stage. You need to take notice of the change of pace. The science is demanding you do. Most climate change indicators are also showing signs of acceleration – for example the loss of ice cover at the poles and in mountain ranges. This needs strong counteraction.
Those 2030 or 2050 targets? They’ll be here faster than you think. This calls for immediacy – reaching that net-zero goal means planning for emissions-reductions now. Your diversity targets need action, not just lip service. You will be evaluated on them.
The rate at which your investors and stakeholders start asking you the tough questions will also increase.
Remember, however, haste. It’s important to not set off in a misguided direction. Take some initial time. Plan effectively how you want your business to change, and contribute, over the years ahead. Then you will have the right answers.
This all may seem daunting. But remember you’re not alone. 56% of asset managers say they’re finding it difficult to keep up with ESG regulations. But it’s critical you get comfortable with them.