2020- End of year Summary
2020, the founding year of Governex, has seen a rollercoaster of unprecedented global changes and the birth of the new normal. Despite the tragedy surrounding the Covid-19 pandemic, 2020 has been a monumental year for ESG and Sustainability.
Key Highlights of 2020:
Health & Wellbeing has become a central focus
Indoor Environmental Quality (IEQ) has become a focal point for asset managers needing to demonstrate healthy working / living environments to their occupiers during the pandemic. PropTech and live meaningful data are proving the key to unlocking and demonstrating the Health & Wellbeing credentials of real estate.
The Rise of the S and G in ESG
2020 saw a demand for social equality with the rise of the Black Lives Matter movement following the murder of George Floyd and the boycotting of fashion brands following discoveries of poor working conditions and modern slavery. Companies with sound governance structures were more risk prepared, resilient, agile and more able to successfully align with the new demands from their stakeholders to stand in unison against inequality. New governance codes for the charity and social housing sectors reflected a renewed focus on equality, diversity & inclusion and the integrity and effectiveness of boards.
Further Mandatory Requirements for ESG Reporting
ESG data disclosure and reporting frameworks continued to grow, with 2020 seeing the introduction of mandatory TCFD requirements in by both the UK and New Zealand.
The Economic Resilience of ESG
Covid-19 provided a real-world example of the potential damage posed by ignoring ESG risk. ESG funds saw strong performance compared to their counterparts during the economic downswing from the pandemic and as a results ESG aligned funds saw record flows of capital. With climate change posing a significant future risk, ESG is set to continuing growing in strength throughout 2021.
The demand for ‘Build Back Better’
2020 signalled the first significant steps along the pathway towards achieving Net Zero 2050. Following the economic instability caused by the Covid-19 pandemic, there has been a major drive for economic stimulation to come in the form of a green revolution. December saw the UK Government publish their much anticipated ‘Energy White Paper’, which outlined their ambitious plans for decarbonising the country.
Further Foundations for Green Finance
Rishi Sunak and the UK Government announced it will issue its first Sovereign Green Bond in 2021. They intend to follow this with a series of further issuances to meet growing investor demand. These bonds are aimed at helping finance climate change projects and infrastructure investments that will support green jobs across the country. They also aim to cement the UK’s leadership in Green Finance ahead of COP26.
2021- What should we expect from the coming year?
2020 was a year full of uncertainty and though 2021 will likely provide much of the same, its unpredictability will come as less of a surprise.
Despite a vaccine being rolled out, Covid-19 will continue to have a disruptive effect on many organisations throughout 2021. Lockdowns, travel restrictions and distancing measures will remain an ongoing phenomenon in most of Q1 and Q2 as countries buy time for vaccination programmes to take effect.
Changed work patterns
The enforced working from home requirements of 2020 have expediated the digitalisation and remote online working capabilities of many organisations. This proof of concept will see many organisations continue to facilitate remote working and reduce the demand and frequency of on-site visits.
2021 will see the resolution of Brexit and provide some much-needed market clarity on the long-term prospects for the UK. Early uncertainty and change will likely lead to disruption followed by increasing stability as organisation adapt.
Continued requirement for agility and nimbleness
2020 demonstrated that organisations need to be agile and flexible to change. This will continue to be the case in 2021. Adaptable organisations with strong ESG credentials will further demonstrate their resilience to risk and uncertainty.
Governex is an ESG advisory business that helps businesses with corporate governance as well as answering the question of how they make positive contribution to the environment and social issues.
We help organisations implement the right shift in focus from a purely financial commitment to include environmental, social and governance commitments. All in the context of meeting business purpose, strategy, integrity and diversity.
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