3 Things This Week (ok…4 - it was busy!): Blackrock's ESG Edict, Biden's Green Dream Team, FED GONE GREEN, Net Zero Pension Funds
Larry Fink, Blackrock Founder/CEO, Touts SASB, TCFD & Corporate Purpose
On Tuesday, January 27, Larry Fink, released his 2021 Letter to CEOs. As the head of the world’s largest asset manager, it’s never a bad idea for all CEOs to consider his advice:
Biden’s Dream Green Team
As expected, after Biden rejoined the Paris Agreement on day one, over the balance of the week he expanded on plans to use climate change as the economic driver needed to pull the country out of Covid.
To execute on the vision, here’s a summary of the Climate Dream Team Biden has assembled. Stay tuned for details on the $2-3 trillion economic stimulus package focused on green infrastructure and energy and the impact that will have on access to and cost of capital for businesses. The trickle-down effect will be a faster and greater impetus for public companies to report on ESG.
The US Fed has Gone Green
The US Federal Reserve has joined the Network for Greening the Financial System, a group of 75 central banks committed to addressing climate change risk in banking systems. This move signals an upcoming faster pace of adoption of ESG information to drive decision-making in financial institutions.
Pension Funds Joined the Net Zero Club
With so many global brands daily announcing commitments to achieve net zero by 2050 and the wide-spread adoption of the Task Force on Climate Related Disclosure’s reporting recommendations, it was just a matter of time before major pension funds joined the club. To wit, last week one of Canada’s largest pension funds, the Ontario Teachers’ Pension Plan Board (OTPP), announced their commitment to net-zero GHG emissions by 2050. Very soon, as in weeks from now, the OTPP will release their progressive targets for portfolio emissions, meaning companies in or aiming to be in their portfolio will need to report GHGs and their own reduction target achievements. Standby for more and more funds to make similar announcements this year.
It’s week two of 2021, and ESG is evolving daily.
Each week at ESG Café we share three things to keep you abreast of ESG and sustainability trends that could impact your business – and the investors you attract.
In 2020, it was challenging to keep up with the pace of change, but possible. In this era of unknowns, the one thing we do know is that 2021 will be a year of hyper-responsiveness, hyper-accountability, and hyper-competitiveness, and that applies to your customers, employees and investors.
So, in 2021 we will need even more nimble corporate leadership to respond to the evolving sustainability trends that investors, employees and customers are driving.
Which brings us to the acceleration of ESG reporting in companies. By moving off the sidelines of sustainability and ESG performance, companies that report their ESG performance have used reporting as a platform for communicating how they are adjusting to systemic change, and the value their company provides to their key stakeholders beyond the products or services they provide. The intensity of investor interest in this information has intersected, for the first time ever, with a desire by corporations to share this information as a way to differentiate their brand, compete for customers and employees, and secure cost-efficient capital.
Watch 2021 become the pivotal year in sustainability performance and ESG disclosure in companies of all sizes, including small and mid-cap companies. Staying on the sidelines of ESG disclosure is no longer a low-risk strategy, it's a high-risk gamble where access to capital, customers, and skilled employees is at stake.