07 Sep Your company’s environmental, social and governance performance matters more than you think
Investors today are increasingly obliged to review the performance of the companies they invest in –not just in terms of financial and market performance but in terms of environmental, social and governance (ESG) performance. These “intangible elements” have proven to impact long term shareholder value, meaning that it isn’t just the socially conscious who are now worried about issues such as modern slavery, water use, deforestation, financial climate risk and the just energy transition when choosing where to put their money.
“ESG considerations are becoming a focal point for regulators, governments, investors, and other key stakeholders. In South Africa specifically, a company’s approach to climate change, ethical business relationships and social outreach are becoming increasingly important. However, many organisations are struggling to keep up with ESG requirements,” explains Nikita Lalla, Chief Executive of LNP Attorneys.
“The focus on ESG performance has grown recently. While it used to be just ‘responsible investors’ who showed an interest in ESG performance, it is now a focus of every investor since ESG performance has shown to positively impact the longer-term sustainability of a company,” comments Lalla. However, she advises that many organisations do yet not possess the appropriate level of understanding and skills which are needed to ensure they transform efficiently into sustainable, ESG-compliant enterprises. “This hinders their ability to adopt best practice, manage risk, and ultimately become more competitive,” says Lalla.
These businesses should prioritise their ESG performance by acquiring the services of legal professionals with comprehensive experience in this area. “This will give them access to expert advice on ESG risks and compliance measures, helping them manage their risks more effectively while allowing them to become more competitive,” says Lalla. LNP Attorneys can assist in guiding businesses on their obligations around disclosure and adoption of best practices, and will ensure they meet the expectations and requirements of regulators, governments, and investors.
“We have a multidisciplinary team which is ready to help companies fulfil their ESG commitments. Companies across all sectors need to consider how they meet the expectations of today’s investors, or they risk falling behind their competitors,” concludes Lalla.