ThinkSet: What’s Next for ESG?

Challenges and Opportunities in Building a Sustainable Future

Amid mounting backlash, a global economic slowdown, and an ever-changing regulatory landscape, one question on business leaders’ minds is: What is next for ESG?

Incorporating environmental, social, and governance elements into business and investment decisions remains something of a balancing act. On the one hand, there are the accelerating green energy transition, mounting shareholder pressure, and new regulatory requirements, like the Security and Exchange Commission’s (SEC) proposed climate disclosure rules; on the other, executives are increasingly concerned with their bottom lines, litigation risks, and the politicization of ESG in the US, which will only ramp up with the 2024 election.

Fortunately, our latest issue of ThinkSet—titled “What’s Next for ESG? Challenges and Opportunities in Building a Sustainable Future”—offers insights from leading BRG experts around the world to help decision makers prepare for the road ahead.

Unsurprisingly, a predominant focus remains on the E in ESG. And for good reason: as Robin Cantor and Neal Brody discuss, there has been a rise in ESG-related class actions, largely related to claims of greenwashing. Fortunately, as they point out, sophisticated economic analyses can help. And Steven Sexton writes that the social cost of carbon could quadruple in the United States, making it more difficult for companies to offset carbon emissions and opening the door to more aggressive regulation worldwide.

Climate change is impacting banks and investors too. Walter Mix and David Abshier discuss how banks must incorporate climate risks into their stress tests. And as Calvin Qiu notes—in an article and an upcoming podcast episode with Kenny Grant—these investment decisions now must factor in these risks; however, different risk models can create tensions between public and private-market efforts to account for them.

Yet, as our latest issue demonstrates, it’s not all about the E. Dubravka Tosic, for instance, outlines how businesses can better measure human capital as labor and equal employment opportunity becomes a top ESG issue for shareholders and the SEC prepares new human capital disclosure rules. And in a Q&A with Tom O’Neil, Robert Yates, and Yanqing Lei, we tackle the evolving impact of ESG on boards’ corporate governance strategies.

Finally, with new challenges come new opportunities. Avoiding emissions penalties through greenhouse gas abatement in natural gas supply chains holds significant economic potential for these producers, write Christopher Goncalves and Athanasia Arapogianni Konisti. And Robin Cantor welcomes attorney Mike Fine from Wyatt, Tarrant & Combs to the ThinkSet Podcast to discuss ESG opportunities in the healthcare sector.

Though ESG undoubtedly will remain a hot-button issue, the drive to incorporate these factors into business and investment decisions is here to stay. Now is the time for stakeholders to evaluate the challenges and opportunities ESG can bring as we look to build a sustainable future for decades to come.

We hope this issue of ThinkSet can help.