Which ESG trends will dominate 2021? ESG consultancy Square Well Partners has analyzed which ESG trends dominated 2020 and which will remain in 2021. Have these trends come to fruition? And what does that mean for companies?
Wiesbaden, July 30, 2021. The Corona pandemic gave ESG issues a strong boost in 2020, according to an article by ESG consulting firm Square Well Partners. They believe sustainability will continue to play a significant role in 2021. Indeed, investors have a financial and moral interest in investing in sustainable companies.
Pressure forces companies to act
What have companies learned from the Corona crisis and has that helped them through the first half of 2021? These are the kinds of questions that corporate management should continue to be attuned to this year. 2020 and 2021 have clearly shown how well companies are prepared for crises or whether help is needed in this area. How companies handled their employees and whether they were able to adequately protect them played a particularly important role here. As the Corona crisis is likely to continue for some time, companies should be prepared to take the necessary measures.
What happens when the management level does not feel responsible for sustainability in the company was shown by large investors such as Blackrock. The investment giant voted to discharge certain board members as early as 2020 if they neglected the issue of ESG or did not report on it sufficiently. One thing is certain: by 2021, investors will have no understanding, if nothing is done in the ESG area.
Social issues in focus
Diversity on the board and in the team, work-life balance, human and labor rights in the supply chain: as the topic of employee safety already showed, social issues in particular were high on the agenda for shareholders in 2020 and 2021. The Black Lives Matter movement added further emphasis to this. However, social issues do not only play a role for the company’s own workforce. For example, human rights problems at suppliers can lead to high reputational and thus also financial risks. It is therefore in the interest of both the company and its investors that they minimize these risks.
Square Well Partners describe 2021 as “the year of restraint”. After many employees also had to go on short-time work this year or even lost their jobs during the crisis, it would be inappropriate to pay generous bonuses to the management board. Keyword: fair wages. The same applies to shareholders. When share prices fall or dividends are cut, they will not be pleased if the same company financially rewards the management board for its performance.
Trends continue in 2021
The selected topics show: What was important in the Corona pandemic in 2020 will also be important in 2021. Companies should take these trends seriously, because there is much to suggest that such sustainability aspects will still accompany them in the long term. Even if the pandemic loses momentum in 2022, topics such as social equality, diversity and responsibility will not.
Michael Diegelmann: Founder and Manager
Michael Diegelmann has gained experience in over 150 communications projects (IPOs, investor relations, ESG, M&A, crisis) and has been working in the field of capital market communications since 1997. He is the author of 16 book publications relevant to the capital markets and was previously project manager at an international consulting firm and a Frankfurt brokerage house.
Justus Fischer: Senior Consultant
Justus Fischer has gained experience in various ESG and IR communications projects. He coordinated a cross-media content marketing campaign for an international technology group. Justus studied media studies, rhetoric and literature at the universities of Tübingen, Bielefeld and La Plata (Argentina).