Business models are adapted to ESG compliance

The way companies do business has changed significantly as they strive to embed environmental, social and governance (ESG), she writes Harry Fehily the law firm of Holmes.

While the growth of ESG is rooted in sustainability, the most pressing issue of our time, ESG considerations now permeate every aspect of business models.

Smart, progressive companies are seizing the opportunity to demonstrate their ESG compliance, determined not to be left behind.

Talent attraction and retention, buyer enthusiasm for an ESG mindset, and investment returns are just some of the considerations driving the shift and focus.

Pioneering investment firms show that purpose and profit go hand in hand. ESG has become the driving force behind decision-making in the private equity market. A previously perceived conflict of interest was turned on its head; It is possible to generate a return for investors while achieving broader ESG goals.

Sustainability indices have been outperforming their comparative benchmarks for some time. Recent global unrest and social and economic turmoil have unleashed the perfect storm of resource shortages and rising costs of doing business.

For the Irish market this means that companies are now taking action on the issues we have all been talking about for a very long time. And some investment opportunities are turned down due to ESG concerns.

corporate transactions

Incorporating ESG into your business strategy creates sustainable value for your business, and our clients prove it every day of the week.

Eighty percent of the transactions we processed this year had ESG considerations at their core. It’s a critical part of due diligence and an important consideration for investors.

Mere “greenwashing” is no longer enough. Prudent investors recognize that climate change needs to be factored into their risk management and stress testing frameworks.

regulation

At the same time, we are seeing a parallel change in legal systems as regulators put in place frameworks to help investors determine what economic activities and investments can be considered environmentally sustainable.

Regulators around the world are taking on ESG mandates for action by companies and investors. This has been an agenda item for Europe for a very long time and now the US is stepping up and tackling these issues.

This has implications for Irish companies that are tied to larger US corporations in the supply chain.

We are witnessing a dramatic shift in regulation and standard setting in relation to ESG, requiring a swift response from Irish companies that fall into the supply chain of US companies.

Business models ESG
Incorporating ESG into your business strategy creates sustainable value for your business, and our clients prove it every day of the week. (Image: Getty Images)

Attracting and retaining talent

The phenomena of “big layoffs” and “quiet exit” are already causing a lot of problems for companies when it comes to recruiting, motivating and retaining employees.

Almost three quarters of millennials reportedly say they would take a pay cut if they worked for a sustainable company that shared their ESG values. From a human perspective, not addressing ESG is not an option for successful companies.

Accordingly, employers are looking for alternative ways to attract and retain employees by engaging in interactive CSR projects, offering long-term incentive plans including stock options, and tying such incentives to employee projects that drive organizational improvement, e.g. B. the further development of the ESG footprint of the employer and the like that affect the reputation of a company.

All of these changing trends, from a good governance perspective, require boards to adapt their business model to make it ESG compliant. Adapting and embedding these new policies and practices within an organization can be challenging in the face of so many other internal and external changes.

However, the rewards are many, not the least of which is improved company values, brand and revenue.

Where to start Look at your priorities, but ideally companies need a 360-degree solution to achieve their sustainable business goals.

+ Harry Fehily is a managing partner at holmes. The law firm works with many clients with strong credentials such as John Mullins and Amarenco Solar; BHSL’s Denis Brosnan; Future Energy Ireland, a new joint venture owned by Coillte and ESB; and WYLDE, the esports company co-owned by Usain Bolt. To support clients on their journey, Holmes has strengthened its ESG strategy offering through partnerships with training and consulting firms genius.

Image: Shane Costelloe, Partner – Holmes; Melissa Regan, Attorney – Holmes; James Ring, CEO – Ingenium announcing a partnership between Holmes and Ingenium on an ESG product offering to clients. Picture. Brian Arthur

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