Is ESG a compliance burden? There are many who think it is. Warren. Buffett, for example once said that the ESG exercise is asinine. I am not sure whether Buffett is opposed to the concept of ESG or good governance or responsible business, but he definitely believes that the reporting of ESG within annual reports is onerous.
This article by MATTHEW SEKOL, who describes himself as an ESG advocate, explains the issue:
SEKOL quoted the FT quoting Buffett: "If they asked [the fund directors], ‘Do you want the board of directors and the managers of your companies to spend time and energy on environmental, social, and governance issues or do you want them to spend all of their time and energy on increasing the value of your share?’, I’m rather sure that an overwhelming number of them would choose the latter.”
SEKOL added: “Frankly, I don’t see anything anti-ESG in this statement. If ESG is focused on material risks and opportunities and long-term growth, then wouldn’t companies looking at ESG concentrate on increasing the value of shares anyway? Underpinning this quote might be the conflation of non-material issues with ESG because, as always, ESG is in the eye of the beholder. Perhaps he is referring to the borderline win-win or ‘do well by doing good’ sentiment here. Regardless, if an issue impacts the value of the share, it seems like Berkshire Hathaway’s companies would focus on it, ESG or not.”
And this is kind of the point. Yes, ESG is complex, compliance is tricky. But business is tricky. If making a profit was easy, everyone would be rich. ESG is a strategic imperative not a compliance burden.
Today I am joined by two great guests on the ESG Show: Sue Bonney, until recently a Vice Chair of KPMG UK and its Head of ESG, and now as an independent adviser and Cecilia Thorn, senior advisor at Straife and ESG/Sustainable finance/Strategy consultant. For eight years, Cecilia served as Head of International Relations for the Financial Reporting Council, which regulates auditors, accountants and actuaries, and set the UK’s Corporate Governance and Stewardship Codes.
Sue and Bonnie know their stuff, which is why they are both appearing on the ESG Show, on Wednesday 27th March 2pm GMT. The discussion today: ESG is a strategic imperative not a compliance burden.
Please, join us, it would be great to have you listening and, and indeed asking questions.
