Progressing the ESG Agenda to Become Greener Cleaner and More Competitive

E or environmental issues, are the primary focus for many companies, particularly around climate risk. In some cases, these companies are at an earlier stage in addressing S or social issues, so they may not yet have developed the same level of sophistication in the way these are identified and monitored. Peter Reynolds Head of Greater China, Oliver Wyman Integrating ESG in Corporate Strategy In the past, environmental and societal policies have been an adjunct to the core business, but these are now becoming part of a company’s core strategy, driven by increased awareness and scrutiny of ESG issues amongst consumers, employees, financiers and investors. These emerging priorities have implications both for companies’ own activities and those of its supply chain partners, as Aditya Renjen, Senior Vice President of Treasury & Investor Relations at Olam International Limited (box 1) explains. There is also greater awareness of ESG-related risks, particularly climate risk, which companies are now embedding into their risk management framework. Likewise, their financiers are doing the same when they evaluate lending decisions, which further motivates companies’ ESG ambitions. For example, banks are now pricing in the impact of climate change into their lending decisions, resulting in a difference in the cost of capital between companies that have strong ESG ratings and those that do not.