It has become increasingly clear that the issues of climate change and social inequality are inextricably linked. As the effects of climate change accelerate, it is the poorest portions of the global population that will be most keenly and catastrophically affected.
This represents a particular injustice when you consider that climate change has primarily been fuelled by the unsustainable practices of business and rich nations which, unlike the communities facing the most risk, have the wealth and technology to escape its immediate effects. It remains imperative and urgent that the public and private sector adapt their climate response to ensure targets hold social equality at the same high level as the environment.
Alongside this moral obligation, addressing environmental and social issues in corporate governance is becoming a necessity for businesses in the eyes of their stakeholders. Failing to do so is likely to lead to negative repercussions in the near-term.
Shareholders, regulators and employees are increasingly holding companies accountable for their actions across all three pillars of ESG. In the last two years, there has been a massive uptick in shareholder proxy votes related to ESG. Employees are becoming increasingly vocal about their employers’ use of business influence and operations to contribute to wider societal value and tackle some of the world’s most urgent problems.
There are other reasons businesses should take urgent action to act. The latest report from the Intergovernmental Panel on Climate Change lays bare the impact unchecked emissions growth will have on global supply chains. Physical climate damages to infrastructure and commodity availability could dwarf the supply chain issues we are seeing today, which are already having real effects on company performance. This means there are direct implications from not taking action.
A key principle to remember when taking on work that marries social and environmental considerations is that it must begin with the inclusion of voices and perspectives from marginalised groups to represent the interests of minorities. Otherwise, companies run the risk of ignoring, or even worsening, their stake in the issue.