Even as organizations work toward compliance with environmental, social and governance disclosure requirements, fewer than half (45.7%) of professionals are confident that their company is where it should be related to ESG, according to the results of a recent Deloitte poll.
The answer, an increasing number of companies believe, may lie in hiring a dedicated profession as ESG controller. “The role usually sits within the corporate finance function and is responsible for oversight of ESG-related disclosures in an organization’s financial and reporting processes,” Thomson Reuters reported.
According to the media company, the ESG controller’s responsibilities include:
- Reporting ESG activity,
- Developing ESG policies and procedures,
- Collecting, analyzing and reporting relevant information, and
- Data management and analysis.
“The ESG controller role is likely to continue to gain traction as the scope of ESG regulations on reporting expands and increases in complexity and across jurisdictions,” Thomson Reuters reported.
The idea of an ESG controller hasn’t caught on yet widely, however, the data show. Only 16% of professionals in the Deloitte poll reported that their organizations already have a full-time person dedicated to the role. Seven percent of the poll respondents indicated that their organizations have plans to hire someone for the role within the next 12 months, however, whereas 41.6% of the respondents said that their companies do not have this position and have no plans to hire anyone.
The idea of an ESG controller hasn’t caught on yet widely, however, the data show. Only 16% of professionals in the Deloitte poll reported that their organizations already have a full-time person dedicated to the role. Seven percent of the poll respondents indicated that their organizations have plans to hire someone for the role within the next 12 months, however, whereas 41.6% of the respondents said that their companies do not have this position and have no plans to hire anyone.
Anti-ESG legislation
Not everyone is on board with the push for ESG initiatives, however.
Before heading home for the August break, House Republicans introduced legislation meant to thwart ESG-friendly legislation and anticipated Securities and Exchange Commission rules.
According to a post on JD Supra, H.R. 4790 “would amend the federal securities laws to create a Public Company Advisory Committee within the SEC to protect investors and market fairness. The bill also would limit mandated disclosures requirements, such as those in the proposed SEC rules.
Another proposed bill, H.R. 4655 would “amend the Securities and Exchange Act of 1934 to prohibit the SEC from compelling the inclusion or discussion of shareholder proposals or proxy.”
And H.R. 4767 “seeks to amend shareholder and proxy voting processes in a way that prioritizes growth over political issues while allowing for the exclusion of ESG proposals.”
More than a dozen states — Alabama, Arkansas, Florida, Idaho, Indiana, Kansas, Kentucky, Montana, New Hampshire, North Carolina, North Dakota, Texas, Utah and West Virginia — have enacted measures to eliminate ESG requirements.
“A key theme in anti-ESG legislation from these states is the ban on the use of ESG criteria when managing public retirement systems or public funds. ESG opponents feel that the use of ESG criteria greatly harms beneficiaries, as it has the potential to lead to lower returns,” reported the JD Supra article authors, Reed Smith attorneys Sara Eddy and Jennifer Smokelin. “Typical anti-ESG legislation includes a ban on the use of ESG criteria when making investment decisions that involve public funds. This may include an emphasis on fiduciary duties or a prohibition on divestment from certain industries.”
‘Greenhushing’
In what some have termed “greenhushing,” some companies are choosing to keep quiet about their environmental efforts for fear of public backlash.
“The trend comes as corporate America sees itself as enmeshed in a tug-of-war over climate change. Liberal activists have sued big businesses for doing too little to combat rising global temperatures, while conservative lawmakers have boycotted firms for even acknowledging that climate change should be part of their business calculations,” the Washington Post reported.
“In response, hundreds of businesses have seemingly gone silent,” according to the article, which cites “a report released last year by South Pole, a climate consultancy and developer of ways that companies can offset their carbon emissions” that said that one in four of 1,200 large private companies that have set climate targets do not plan to publicize them.
Read about the ESG initiatives of senior living and care operators and real estate investment trusts active in the industry here.
