The ICRS Debate: ESG: Necessity for success or next on the chopping block? Event Summary

The ICRS Debate returned on the 18th of April at the Royal Society of Arts, welcoming 100 ICRS members and CR&S practitioners on the topic of ESG: Necessity for success or next on the chopping block? 

Jennie Galbraith FICRS, Chair of the ICRS, opened the afternoon with a welcome and set the scene by introducing the key issues that CR&S practitioners are confronted with when it comes to the direction of travel of ESG and regulation.  

On the panel, we were joined by Simon Hodgson (chair) from Carnstone Partners Ltd, part of SLR Consulting, the Rt Hon Baroness Lindsay Northover MP, Zoë Cokeliss-Barsley from Oxford University Press and Paul Bedford from Deliveroo. 

Simon kicked off the Debate by breaking down the term ‘ESG,’ addressing the development of the term itself and the issues and topics that come underneath it. Zoe started the discussion by noting that the term originally came into the Sustainability arena via Investor Relations, however it’s now considered to be equivalent to ‘Sustainability’ or ‘CSR’, and that companies still often hold their own interpretations.  

Paul added that he sees ESG as broader than how the investor community use it as a measurement of risk. For example, in Deliveroo it’s an elastic term and defines a broader set of issues in the short, medium and long-term that the company seeks to address. The panel agreed that using the term ‘ESG’ has made it a more investable concept. Paul described it as easier to digest for investors as it relates to quantifiable metrics and methodologies.   

When it comes to ESG, Baroness Northover emphasised the importance of the ‘G’, governance, in putting in place robust structures and systems to enable companies to adhere to certain standards. She described governance as foundational and should be aligned throughout the company to ensure the ‘E’ and ‘S’ are properly addressed. 

The discussion then turned to the developing regulatory environment and whether ESG is at risk of becoming a compliance exercise. Paul noted that in the short-term, new legislation will require a large effort from companies, and will reduce the bandwidth for innovation due to the complexity of the disclosures and reporting required. For example, the EU Corporate Sustainability Reporting Directive (CSRD) is focusing time and attention within companies to adjust their internal processes and prepare for disclosures. However, once these new processes become routine, it will be easier and should help to scale change. Baroness Northover agreed that such compliance will drive change and highlighted that often voluntary CR&S efforts from companies can be superficial. She emphasised the importance of practitioners providing feedback on regulations so that Government can understand the challenges that CR&S practitioners are facing and the opportunities they see to drive sustainable change via legislation.  

Following this, Simon raised the final question of the Debate: are all parts of ESG equal in importance, and if not, which one are here to stay? Zoe began by noting that Net Zero is the one we cannot afford to lose. For example, the Oxford University Press is looking at its approach to biodiversity, however, this cannot be achieved without setting achievable and reasonable emissions targets as biodiversity is dependent on the climate. Zoe added that the term ‘ESG’ is important as it highlights the importance of the ‘S’ and ‘G’ under one unified banner. Overall, the panellists agreed that the ‘E’, ‘S’, and ‘G’ are equally important, as they consistently intersect and evolve together.  

The Debate then opened up to the audience, and saw discussion around the lack of emphasis on the ‘S’, noting that social impact is often overlooked in favour of measurable, quantifiable metrics around carbon. There was also concern that compliance will stifle progress on more leading sustainability strategies and programmes, and the lack of high quality, available of data on ‘S’ and ‘G’ creates a barrier to uncovering meaningful insights.  

Alice Lawson, Investment Director at Inflexion, concluded the Debate by thanking the panel for their knowledge and expertise, and attendees for engaging with the timely topic. She emphasised the critical work of CR&S practitioners, highlighting ESG as integral focus for the investment community. Overall, the Debate concluded that ESG is here to stay.  

This Debate was kindly sponsored by ICRS Patron Member Inflexion