Sustainability in 2021: A bird’s-eye view of prevalent ESG trends

Written by Ian Geldenhuys, Programme Director - ESGCloud Team
18 Feb 2021

While the past year, and the beginning of 2021 has certainly brought its share of disruption, change is not necessarily all negative.

One arena that has been shaken up in a positive way is Environmental, Social, and Governance (ESG), with it being pushed to the forefront and set to become more prominent during the rest of this year. This in turn will make the use of sustainability reporting software more important as well.

Part of the reason for this is the continued prevalence of the Covid-19 pandemic. While some respite is in sight, with vaccine rollouts beginning, or continuing globally, it is becoming apparent to both governments and business leaders that they will need to contend with pressing health and safety concerns for the foreseeable future.

We also expect that all parties will find themselves having to pay more attention to managing an ESG action plan, and to measuring and reporting on their sustainability initiatives.

Another positive change that we can anticipate on the environmental front entails reinvigorated global climate action leading to a renewed focus on environmental concerns. For example, the new administration in the United States rejoining the Paris Agreement for climate action in its first days in office was a clear signal that Joe Biden’s administration considers climate change to be amongst its highest priorities.

Business leaders, such as Bill Gates, are also signalling why environmental and climate concerns need to be made a top priority immediately amongst all sectors of society. The philanthropist and tech titan is warning that unchecked, the next two decades could bring the kind of economic damage that would likely be as bad as having a COVID-sized pandemic every ten years. By the end of the century, according to Gates, it will be much worse if the world remains on its current emissions path, which means that a far-reaching and comprehensive ESG action plan is needed right away.

Another trend to watch out for is for investors looking to ‘decarbonise’ their portfolios, moving away from companies that aren’t aligning with the stated goals of the Paris Agreement and which continue to send more greenhouse gasses into the environment than allowed. In other words, expect compliance regulations around environmental initiatives to start showing its teeth, and some companies losing investment because of it.

Last but certainly not least is social inequality. As with a renewed emphasis on the environment, the pandemic has highlighted another side to social inequality, beyond the familiar scourges of racism, human rights abuses and gender equality. It has highlighted the inequalities of nations, with some having considerably more access to vaccinations than others, with poorer nations typically falling behind.

At time of this writing, some developed nations, like Canada, for example are being reported as having enough to vaccinate their population five times over. The South African government, amongst others, is urging wealthier countries to donate their surplus to the developing world or to distribution instruments such as COVAX. In today’s world, access to life-saving medicines is quickly becoming an issue of social equality and provoking questions about whether profitability should be allowed to take precedence over lives.

With this, a controversial issue on the horizon is whether society will find itself in a kind of medical divide. We may well see two camps emerging – those who have been vaccinated and thus are allowed to more freely and socialise en-masse, and those who are still waiting for the vaccine to be made available and rolled out in their countries, and subjected to exclusive restrictions.

In a nutshell, for these reasons and more, sustainability, and being able to demonstrate a sensitivity towards ESG concerns, is going to be paramount for the rest of 2021. Those companies that are able to measure, report and show that they are taking these into account will be all the more relevant into this year and beyond. Those that do not, will likely start feel the impact of turning a blind eye to ESG this year as well.

Related perspectives

ESGCloud is a SaaS platform that roots ESG in company performance by connecting ESG effort to competitive strategy and opportunities, and in turn profitability.

The software is innovative and intuitive to use, and features have been created with the end user in mind, making data collection and reporting easy through an all-in-one ESG tool.