PART 2:
THE IMPORTANCE OF
DISCLOSURE
According to a PWC and Workiva survey, business executives recognize the
importance of ESG reporting with 89% already reporting some ESG data now
despite challenges with compliance and data collection. Only 2% of companies are
taking the "wait and see" approach by choosing not to prepare for SEC rules.
Sustainability concerns have changed the way many investment and capital
allocation decisions are made. In the past decade, the risks of climate change that
could physically destroy the value of assets have come to light, compounding the
rise of ESG dealing with climate resilience as an important asset class. It is clear
that sustainability has value to investors.
A new survey by Morningstar found that out of 500 asset owner fiduciaries, 85%
said that ESG factors are "very material" to the investment process. Additionally,
corporations should be aware that their investments in fossil fuels may become
uninsurable, as many large insurance agencies are ending support for new oil and
gas fields. This will drive investment out of stranded assets and into materially
relevant ESG funds that have appropriate risk management in place. The increase
in claims for climate-related damages from flooding, wildfires, and other hazards
has increased markedly in the past 10 years, leading insurance companies to issue
far more nonrenewals on existing policies. At least on the environmental end,
insurance companies deem ESG matters a sizable risk, and this should not be
overlooked by the everyday business decisions of firms.
WHY DOES IT MATTER?
Going forward, the ability to show climate resilience and
responsibility through clear results and precise data
against ambitious targets will directly affect a company's
access to capital and ability to insure its business.
Sustainability & Energy Management Simplified
