Name: Paid Post - Is ESG prompting the end of shareholder primacy? | FT Big Deal
Uploaded: 2020-03-07T16:13:18.000Z
Duration: 2 min 49 s
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Adverbs of degree

Shareholder supremacy has been a really dangerous notion in many ways.

The system we operate within has been so focussed on short-term profit creation

at the expense of people and the planet that that approach is no longer an option.

Directors now need to look more and more at ESG type issues as both risks

and opportunities, and it’s ‘Stakeholder Capitalism’.

Looking at the investment landscape today, there is certainly a significant

change and a relatively fast-moving change. 90% of the decisionmakers in M&A processes

There is more of an appetite to acquire businesses that already have

strong ESG credentials. It’s a new way of looking at companies.

You’re also looking at some of these so-called non-financial aspects,

which at least in my opinion are financial, because ultimately

Between 2016 and 2018 alone, there was a 38% increase in assets with an ESG

or responsible lens. If you are a business who wants to be highly valued,

and you want to reduce the risks that are popping up in your due diligence,

you better get your ESG measurements in order.

The current problem with ESG due diligence is, that it is not yet clear

what the real value-drivers are in a transaction, from an ESG perspective.

Professionals like lawyers will be called upon to help develop

a framework for due diligence to preserve that value.

The B Team is a group of global business leaders and civil society leaders

who together, agree that business-as-usual is no longer an option.

It’s not enough to lead by brave action in your own company anymore

because if we are to deliver the Sustainable Development Goals

we have to change the system that we operate within.

There’s a moral reason for it, but it’s also good for business.

There are very much reputational issues around companies that are perceived to be

trying to operate in a sustainable, long-term was as opposed to

very short-term, profit focussed only ones.

When I came across ESG for the first time, I thought this was just another

management fad, or some consultants talking about stuff.

I very quickly came to the conclusion that this was important and

perhaps even mission-critical for businesses going forward.

An economic system that is focussed on the short-term,

has left us with a burning planet, has left us with a broken social contract.

We have a decade to deliver on the vision that will allow us to create

an inclusive economy for all and we had better get busy.