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By Nick Maher
Special Counsel and energy lead
Melbourne, Australia

The SEC Newgate ESG Monitor, our first ever global study of public attitudes to ESG, highlights why this is an issue that’s now at the top of the agenda for business and investors.

Unsurprisingly, climate change and the environment is the number one issue for the more than 10,000 people in Europe, the Americas and Asia Pacific surveyed in the SEC Newgate ESG monitor.

It also found that environmental issues including action on climate change and carbon neutrality as being the most powerful factors in determining public perceptions of governments’ and corporate ESG performance.

These are the issues that are driving some of the biggest corporate activity we have seen in the world’s stock exchanges.

It has seen the rise of specialized ESG investing and funds that have had a major impact on the valuations of some of our once biggest companies such as the oil and gas giant Exxon Mobil slide out of the Dow Jones Index and the rise and rise of the renewable technology companies such as the electric car pioneer Tesla.

According to Bloomberg, global ESG assets are on track to exceed $53 trillion by 2025, more than a third of $140.5 trillion in projected total assets under management

This means ESG funds have a major influence on the companies direction, share performance, and access to financing and growth opportunities.

The world’s biggest miners have taken giant steps in response. Rio Tinto has committed to a 50% cut in its emission by 2030; and BHP have sold its oil and gas portfolio to Woodside.

In turn, many of these major resource companies are investing in hydrogen and seeking to source renewable energy for their mines, smelters and the potential for green energy in the future.

Due to the rising ESG trend, there will be demand for greater transparency from companies by the markets, particularly risk analysis relating to carbon emissions and other social and governance issues that can impact on both investment and divestment decisions.

For many companies this represents a new landscape where they will be operating under far greater scrutiny from both customers and investors.  It will require greater transparency with markets and more open conversations with customers who are more and more basing their consumer choices on sustainability.

For companies, the SEC Newgate ESG Monitor modelling shows overall ESG ratings are driven by responsible use of natural resources and reporting in a transparent manner. On specific performance measures, companies generally scored best for strong risk management and promotion of workforce equality and diversity (to see the full set of data, download the global ESG Monitor report here)

The public will continue to be the primary driver and influencer on ESG that ultimately impacts on investors, regulators and voters. From the corporate perspective, early adopters of genuine initiatives, not simply greenwashing, will have an advantage over their peers.

The SEC Newgate Global ESG Monitor is a groundbreaking research project across 10 countries that examines how environment, social and governance issues are influencing perceptions of business and governments.