ESG: Not as easy as ABC

What was once a box-ticking exercise has evolved into a central market driver, according to Caroline. “ESG now permeates all aspects of an organisation. It was originally about compliance, but it is now a key market driver which informs the strategy of most large organisations,” she said. 

Environmental lawyer Pamela Turok of CMS echoed this sentiment, calling the rise of ESG a “phenomenon” that has fundamentally reshaped how businesses operate. 

The ‘S’ word and managing risks 

While environmental concerns often dominate the ESG narrative, the panel highlighted the increasing significance of the social dimension. Catriona Aldridge, Employment Partner at CMS, noted that stakeholders are placing greater emphasis on issues like diversity, equity, inclusion, and belonging (DEIB). “People want to work for organisations with a positive culture, good working practices, and strong environmental credentials,” she said, stressing that this focus spans all generations, not just younger employees. 

The panel also explored the risks associated with ESG, which Caroline summarised as regulatory, reputational, and physical. She highlighted the growing importance of frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD), which helps businesses understand the impact of their operations on ecosystems. 

Reputational risk is another growing concern, particularly in light of stricter due diligence directives and legal cases related to greenwashing. “Companies need to focus on getting it right from the very start,” warned Stephanie Smith, Managing Lawyer at Rewilding Law. 

The road ahead 

Looking to the future, the panellists agreed that the ESG landscape will only become more complex. Caroline pointed to the need for adaptation finance to address the challenges of a changing climate. “How do we future-proof? We will need more collaboration between the public and private sectors to help scale-up and de-risk investments to make them viable”. 

However, as organisations push forward, tensions may arise when environmental and social goals clash. Catriona illustrated this with a dilemma: “What if becoming more environmentally friendly means taking away a fuel benefit that’s really important to employees? Do you prioritise the green agenda or the people agenda?” 

A call for innovation and collaboration 

The panel concluded that navigating the ESG journey requires innovation, collaboration, and a long-term view. Whether it’s through adapting to regulatory changes, inclusive workplace cultures, or future-proofing investments, the road ahead will demand hard choices and creative solutions. 

As Caroline put it, the ESG phenomenon is not going away - it is redefining how organisations operate and thrive in an increasingly interconnected world.  

If you have any questions, please email caroline.barr@uk.abnamro.com.