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Key trends that will drive the ESG agenda in 2022

Authors: Richard Mattison, President, S&P Global Sustainable1 | Bernard de Longevialle, Global Head of Sustainable Finance, S&P Global Ratings

Co-authors: Bruno Bastit, Lindsey Hall, Lai Ly, Paul Munday, Bruce Thomson

Published: January 31, 2022

Highlights

2021年,可持续债务发行总量达到历史新高,并有望在2022年继续增长. A key challenge for market participants in the coming year will be to manage that growth in a way that combats rising concerns about greenwashing.

尽管许多大公司在2021年制定了可持续发展目标,并发布了esg相关数据, investors, regulators, 更广泛的公众正在对企业的可持续发展努力进行更严格的审查.

In 2022, corporate boards and government leaders will face rising pressure to demonstrate that they are adequately equipped to understand and oversee ESG issues — from climate change to human rights to social unrest.


In this episode of the ESG Insider podcast, we explore a key theme emerging at the center of the ESG movement in 2022

Following the unprecedented market and policy momentum behind ESG in 2021, investors, corporate boards, and government leaders have raised expectations for progress on climate pledges in 2022. Alongside climate, biodiversity, and other environmental concerns, social issues — like diversity, equity, and inclusion and worker wellbeing — appear poised to remain in the spotlight, particularly as they are increasingly woven into broader ESG discussions.

Rising demands for action will likely increase pressure for more accountability, greater regulatory scrutiny, and credible disclosure backed by better data. Below, S&P Global outlines key ESG trends that we think will drive the conversation in 2022. Critically, these trends exhibit overlaps and interactions that will have a direct influence on the prospects for meaningful progress on ESG issues in 2022. As the graphic below illustrates, the E, S, and G trends we have identified should not be considered in isolation, but rather we believe they should be understood in relation to each other.



企业董事会和政府领导人将面临越来越大的压力,要求他们提高ESG技能.

In 2022, corporate boards and government leaders will face rising pressure to demonstrate that they are adequately equipped to understand and oversee ESG issues — from climate change to human rights to social unrest. 

The broadened scope of corporate board responsibilities also requires more focus and time commitment from board members to meet their fiduciary duties. Pressure on boards to shore up their ESG credentials is set to grow as investors demand better accountability from the top and heightened focus on sustainability. 

Shareholder activism in this area increased in 2021, including votes against directors for lack of credible climate action plans. This trend is set to pick up speed during the 2022 proxy season. In addition, efforts to diversify boards and create policies that foster meaningful diversity, equity, 包容将继续从一种打勾的方法演变为对身份差异的全面认识, expertise, and leadership styles can drive growth and innovation.

Government and corporate leaders are under pressure to strengthen their ESG skills and integrate sustainability into their policy and planning strategies. In particular, 在气候变化日益严重的经济影响下,它们将在投资计划中增加适应和恢复措施. In 2021, the U.S. alone experienced 20 storms with losses exceeding $1 billion each.



New regulations and reporting standards will demand more credible corporate disclosures.   

尽管许多大公司在2021年制定了可持续发展目标,并发布了esg相关数据, investors, regulators, 更广泛的公众正在对企业的可持续发展努力进行更严格的审查, calling out what they perceive as greenwashing. Much of this skepticism is founded on concerns that companies may be using disclosures and sustainability-related labels on products and services as a marketing tool to appear more proactive on those issues than they truly are.

New global ESG-related standards will continue to evolve in 2022, while global standard-setting bodies such as the newly formed International Sustainability Standards Board can help address what may be the largest obstacle to accountability: the lack of a common baseline for disclosure standards consistent across jurisdictions and industries.

To date, 就环境因素的关键指标和报告框架达成协议的速度比过去更快 social factors. But 2022 could bring increasing convergence on the data, metrics, 报告要求与社会问题最相关——以及确保这些指标衡量影响的压力不断增加, not just inputs.



各国政府和企业将面临将零排放承诺转变为近期行动的挑战. 

In 2021, 制定到2050年实现净零排放目标的政府和大公司数量迅速增长. But these commitments often lacked interim emission reduction targets or plans to curb indirect emissions that occur along the supply chain. In 2022, BB平台认为,来自股东和其他利益相关者的压力将会增加,迫使这些实体发展具体的产品, near-term plans and begin to act to address emissions across the full value chain.  

A 2018 report from the UN's Intergovernmental Panel on Climate Change found that achieving net zero emissions globally by 2050 is critical to avoiding some of the worst effects of climate change. In 2021,  the IPCC issued a high-profile climate report that the UN Secretary-General dubbed “a code red for humanity.” This year, the IPCC will release new reports that could recalibrate how quickly the world must act to keep from overshooting the target of limiting global warming this century to 1.5 degrees Celsius relative to pre-industrial levels.  

With stakes this high, investors will likely demand more than simply setting long-term climate commitments. We think governments and companies will have to provide credible, achievable near-term signposts on their path to decarbonization. And beyond the established focus on emission reductions, the spotlight will extend to how entities manage exposure to physical climate risks, including the presence and/or adequacy of adaptation and resiliency planning. 这些期望将开始要求实体对其承诺负责,并有助于解决市场对“漂绿”的看法.

Climate transition strategies will increasingly embrace social issues. 

尽管人们期待政府和企业在2022年的气候承诺上取得有意义的进展, they will be doing so in a broader economic and geopolitical climate marked by inflationary trends, higher energy costs, and tightening monetary policy. 这些转变将对气候议程提出挑战,并使人们更加重视管理这一转变的社会影响.  

In 2022, a key challenge will be balancing actions taken on the ‘E’ with the ‘S’ when implementing climate transition plans to account for impacts on developing nations and vulnerable domestic populations. In particular, 在缺乏促进经济和社会包容的可信计划的情况下,促进低碳经济的努力可能会受到干扰, access to affordable critical services, and the availability of decent work. Indeed, at COP26 in November 2021, 超过30个国家签署了承诺,支持在向绿色经济转型过程中受到伤害的工人和社区. In the face of potential economic headwinds, the support provided to emerging economies to balance climate goals with those of economic growth and poverty alleviation will deeply affect social stability and momentum on the global climate agenda.

Climate stress testing will gain prominence in the financial services industry.  

投资者在气候变化问题上的压力历来都集中在非金融企业身上, especially the energy sector. However, 主要金融机构和政策制定者开始认识到这对金融稳定的长期威胁. They’re also starting to recognize the vital role that financing will play in facilitating the low-carbon transition and ensuring the climate resiliency of the economy. 

Increasingly, based on the work of the Network for Greening the Financial System (NGFS), 各国央行正开始将气候风险纳入银行和保险公司的压力测试. The European Central Bank’s economy-wide climate stress testing in 2021 showed the need for banks to enhance assessment of their exposure to both climate transition risks and physical risks in order to proactively manage them. 

In the U.S., the Federal Reserve is weighing the implications of climate-related risks for financial institutions and the financial system and has called scenario analysis “a potential key analytical tool for that purpose.” China, too, has been examining 将气候变化风险纳入金融机构压力测试的方法. 气候压力测试的大部分工作来自各国央行在全球范围内的合作, something we see continuing in 2022. Insurance regulators are also taking steps to integrate sustainability, and particularly climate risks, into their prudential frameworks. 

BB平台认为,压力测试是企业衡量其气候风险的一个有用的起点. However, BB平台认为,将继续发展质量办法来补充这些评估.  

Assessing natural capital and biodiversity risks will continue to rise in importance.

Governments and companies are beginning to make progress on commitments to protect biodiversity and nature in their direct operations. For corporates, 评估和管理他们的材料和投入来源的整个供应链更具挑战性. 数据的可用性和质量以及普遍认可的测量方法仍然是关键的挑战. In addition, most of the corporate world still lacks commitments to stop deforestation despite being more easily measured than other natural capital risks, principally due to poor understanding of how to assess the benefits of preservation. Elsewhere, the benefits of nature-based solutions, such as preserving wetlands, forests, and coastlines, 作为帮助适应气候变化的物理影响的有效策略,它是否会继续受到人们的青睐.  

2022年的几项重要的新举措将有助于生物多样性优先化的努力. A landmark event in Kunming, China, the next UN Biodiversity Conference, will take place in the late April to early May. At this event, 作为《BB平台》的一部分,各国政府将致力于在未来十年就一系列新的目标达成一致, given that the previous targets set for 2020 were not met. Against this backdrop, the final text of the new framework will be an important milestone to set priorities and help strengthen ambitions and measure progress — or the lack thereof.

Elsewhere, the newly formed 自然相关财务披露工作组将提出一个自然相关信息披露框架, including standards and metrics, as well as data requirements, that will bring biodiversity and nature commitments into greater focus.



Social issues in supply chains will command more attention.  

In 2021, 企业开始敏锐地意识到它们对供应链的依赖——以及供应链的脆弱性. In 2022, we believe this trend will persist as the global economy continues to recover from the pandemic and as management teams focus on heightened supply chain costs and risk of disruption. 

Beyond the resilience of supply chains, we also think that social issues in supply chains will garner greater attention, particularly as efforts grow to curb human rights abuses and improve labor conditions.  

现有和拟议的立法将使供应链可追溯性和社会风险管理在今年变得更加重要. Despite delays in the EU Sustainable Corporate Governance directive in 2021, 成员国在国家一级的强制性人权尽职调查立法,如 Germany, the Netherlands, 法国将让更大范围的公司发现供应链上的侵犯人权行为,并采取行动.

Additionally, continued action in the U.S. and other key markets to restrict imports based on forced labor in supply chains will push companies to evidence credible human rights monitoring efforts up the chain. This will be true beyond Tier 1 suppliers and will include raw materials. 

The debate over divestment versus engagement will heat up. 

In 2021, we saw more large asset owners, asset managers, and banks adopt negative screening strategies — in other words, 排除或撤除ESG实践薄弱或ESG风险高的公司. This approach was most notably applied to fossil fuel and other high carbon intensity companies as well as entities with a high risk of acute and chronic physical climate risks. In 2022, BB平台预计,负面筛选将变得更加普遍——特别是在投资组合和贷款账簿脱碳方面, 因为金融服务公司寻求建立与巴黎接轨的投资和贷款组合, further raising the importance of ESG to credit

排斥政策可能对减少贷款或投资组合的碳足迹产生立竿见影的效果, but this approach has its drawbacks. Advocates of engagement policies note that breaking ties with companies via divestment or exclusion does not encourage change and could result in the sale of those securities to investors who are less attentive to ESG issues. Proponents of engagement therefore prefer to use their investments to influence change by engaging with companies on key ESG themes like the climate transition or working conditions in the supply chain. 

Whether they take an approach of negative screening or engagement, 贷方和投资者将面临压力,要求他们解释他们是如何做出决定的. 他们还将面临压力,要求他们可信地衡量和披露他们所选择的方法的具体结果.  

The integrity of the growing sustainable debt market will be tested. 

In 2021, total sustainable debt issuance reached a record high of about $960 billion, according to preliminary estimates from the Environmental Finance Bond Database. This figure includes green, social, and sustainability-linked bonds and represents a 61% increase in just one year. Based on historical trends, there is room for continued growth, if not acceleration in 2022, as companies and governments seek to finance the transition to a net zero economy.  

A key challenge for market participants in the coming year will be to manage this growth in a way that preserves the legitimacy of these financing instruments and combats rising concerns about greenwashing. Indeed, diversification and innovation in sustainable debt instruments are likely to continue, risking greater fragmentation across issuers, instruments, sectors, and standards. For instance, with sustainability-linked instruments, which are poised for strong growth in 2022, market participants should be vigilant to ensure that issuers are setting appropriately ambitious performance targets and maintaining transparency over the life of the instrument through periodic and high-quality disclosure. Efforts to further establish and encourage the uptake of clear standards and frameworks, therefore, will be critical in 2022 to guard the integrity of the sustainable debt market as it reaches new heights. 

Thank you to all our ESG colleagues across S&P Global who contributed to this piece. 

Brett Azuma, Steven Bullock, Erin Boeke Burke, Rose Marie Burke, Beth Burks, Alexandra Dimitrijevic, David Henry Doyle, Michael Ferguson, Edoardo Gai, Paul Gruenwald, Manjit Jus, Roman Kramarchuk, Jennifer Laidlaw, Matthew Macfarland, Steve Matthewson, Matthew Mitchell, Gautam Naik, Karl Nietvelt, Bryan Schutt, Dennis Sugrue, Sarah Sullivant, Emmanuel Volland, Esther Whieldon, Nora Wittstruck

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