Businesses Seek Governmental ESG Standards, Policies

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More than 200 businesses worth trillions across the United States and Europe recently urged their governments to take climate and environment, social and governance action. They say that by not coming up with international standards, businesses would be unable to properly channel investments toward sustainable businesses, which could hinder restructuring of financial systems toward long-term value creation and resilience.

In the US, 163 companies sent a letter to Congress urging passage of infrastructure and clean energy legislation, especially the Biden Administration’s recently announced Build Back Better Act framework. In Europe, 57 organizations sent an open letter to the European Union to act on ESG disclosure standards.

The EU request comes from businesses worth more than $9.8 trillion as they seek the European Commission to support standards supporting IFRS Foundation’s launch of the International Sustainability Standards Board.

The European businesses say in the letter that because they rely on international supply chains and attract business from across the world a worldwide reporting standard is necessary to evaluate a company’s sustainability performance. Such international cooperation in non-financial reporting is needed to meet the needs of all markets, they say.

Improving sustainability and managing supply chains is already where businesses are focusing their future needs and ESG reporting is considered a lagging piece. Making such improvements standard needs to be part of the process, according to the letter.

They say this commitment should be supported globally for consistent performance metrics and disclosures to improve sustainability decision making and accountability. The businesses say sustainability needs to be integrated into accounting and reporting systems.

Those companies wants the EU to promote such ESG standards through the European Green Deal and the Corporate Sustainability Reporting Directive. The companies say businesses and industries should be involved in the process to develop the best overall standards.

European businesses also recently sought for government action to require companies to report their net zero emissions plans.

In the US, the companies support the Build Back Better framework, which includes a $555 billion investment toward climate change as well as some of the most ambitious environmental policies in history. The businesses, though, seek even more legislation, including a budget reconciliation package that includes what they call climate-smart investments that will help the country achieve up to 52% emissions reductions.

The US companies say such efforts are a chance for the US to promote private sector investment and innovation to help markets combat environmental issues.

In addition to the clean energy investments of the framework, the businesses want the US introduce additional policies that include setting a price on carbon and having corporate polluter fees.