Environmental, social and governance (ESG) issues will gain prominence in 2021 as a litany of disrupters from 2020 linger, according to a new report from S&P Global Ratings. Over the past year, the global economy faced a string of compounding ESG issues — the pandemic, social injustice and extreme weather and wildfire events topping the list — which shaped how companies do business. In 2021, these ESG forces will continue to play out on a larger stage, S&P Global says.
“As we enter 2021, we expect the ESG landscape to continue to evolve as current ESG issues mature, new themes emerge, and the growing awareness of the intersections between our global society and the natural world make ESG even more pertinent,” according to the report.
S&P Global anticipates that a handful ESG topics will dominate the zeitgeist in 2021:
—Persisting pandemic
—Fight for equality
—Climate momentum
—Biodiversity crisis
Of particular interest for companies that choose to report on their ESG initiatives and progress is the fact that S&P Global expects the world of sustainability reporting to begin to move slowly toward more standardization. The investing community — and the companies they invest in — relies on a growing number of frameworks to assess materiality. With that in mind, S&P Global is expecting to see “material progress in the long journey towards developing and implementing more standardized and relevant ESG standards.”
While the organization believes that integration of sustainability reporting with financial reporting is not likely in 2021, “we anticipate that more companies will continue to adopt SASB, TCFD, and Global Reporting Initiative (GRI) recommendations.” Beyond this, the report states, “we expect regulations requiring greater disclosure to proliferate and some harmonization.”
For more information on the confluence of financial and sustainability reporting, download the ebook How to Marry ESG & Financial Reporting to Reap Big Benefits from E+E Leader.
