ESG in 2022- Pt 1

I’ve been thinking about environmental, social, and governance issues (“ESG”) for almost twenty years -- long before they became mainstream. As an in-house lawyer at a public company prior to joining academia, I had no choice. I teach, research, and consult on these issues now and have a whole lot of thoughts about them, which I'll share in coming posts. 

I had the honor of presenting on "ESG and India in 2022" yesterday. ESG is a hot topic in India, as it is everywhere - - I have either attended or spoken on half a dozen panels on ESG this year to introduce the topic to lawyers. If you're not familiar with the term or think it's completely irrelevant to what you do for a living, here are some common classifications for investors that integrate ESG into their portfolio selection and investment process. 

Environmental: climate change, water, alternative energy, pollution & waste management

Social: human rights, workplace standards, worker health safety, diversity & equal opportunity, labor relations, land grabs

Governance: bribery & corruption, board diversity, corporate political contributions, executive compensation, disclosure & transparency, board independence, tax avoidance

If you're a transactional lawyer, chances are you or your clients deal with at least one these issues directly or indirectly.

Here are some interesting statistics from the 2021 RBC Global Asset Management Responsible Investment Survey, which had over 800 respondents from all over the world. For context, almost half of the respondents had over one billion in assets under management:

• 72% of global investors integrate ESG principles in their investment approach and decision-making.
• 96% of respondents in Europe, 81% in Canada (down from 89%), and 65% in US say they use ESG in decision making.
• 83% of global investors said ESG-integrated portfolios are likely to do as well or better than non-ESG-integrated portfolios, about the same as last year.
• 97% of EU and 75% of US investors believe ESG-integrated portfolios perform as well as or better than non-ESG integrated portfolios.

During my talk, I focused on the following topics at the audience's request:

1. What is Environmental Social Governance (ESG) and why is sustainability is important?

2. How can investors apply these non-financial factors as a part of their analysis process to identify material risk and growth opportunities?

3. What is sustainable investing? How does it differ from ESG integration?

4. Co-relation between a smart investment and sustainable innovation.

5. Did this pandemic teach us a lesson about ESG? How is it going to affect the call for the climate change issue?

6. Responsibility, sustainability, and diversity are the pillars of ESG. How are MNCs are adopting this?

7.What do ESG practitioners do and what is the scope for growth/ global career opportunities in ESG?

It was an honor to talk about ESG to an audience from a country where these issues are a literally a matter of life and death. For example, almost 20% of deaths in India in 2019 were attributable in part to pollution. I’ve also been thrilled to introduce my law students to these concepts and help them discern the facts from the hype. If they are any indication, the next generation of lawyers will think of ESG as a matter of course and not as a special category of legal or business issues.