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In this publication we explore some of the key global ESG themes that will shape the legal outlook for businesses in 2021 and the trends we see in different countries around the world.
Visit our dedicated ESG page to find out more about our ESG team and explore our ESG focused thought leadership.
ESG Legal Outlook 2021
At the start of the Covid-19 pandemic in 2020, many questioned whether the resulting economic turmoil would result once again in climate change and other ESG issues being relegated to the back burner.
In fact, what we have seen is the exact opposite. Both Covid-19 and the Black Lives Matter movement have acted as “ESG accelerants”, shining a brighter light on the “S” in ESG in particular.
Not surprisingly, corporates and the financial sector alike are increasingly considering the environmental, social, human and economic impact of their business decisions and focusing more on long-term sustainable value creation.
The Covid-19 pandemic has sharpened everyone’s perception of risk, leading some to question whether the health crisis is just a “dress rehearsal” for the climate crisis.
2020 saw a spate of high-profile climate pledges – from governments, banks, asset managers, pension schemes and corporates alike. The emphasis in 2021 will be on turning these announcements into credible action plans. Those who don’t, run the risk of being accused of greenwashing.
As the interest in sustainable investment and ESG products continues to increase at pace, so too does the fear of “greenwash”, and its younger sibling “social wash”.
Achieving net zero by 2050 will require a significant reallocation of capital towards low carbon/more sustainable investments. But to do that investors need to feel confident that what they are investing in is indeed as green or as sustainable as it claims to be and not just the product of greenwash.
Investors – including influential groups such as Climate Action 100+, the Institutional Investors Group on Climate Change (IIGCC) and activist investors such as Chris Hohn – have warned that they do not intend to ease up on engagement with investee companies in 2021, in particular on climate change and diversity issues.
Investors have warned that, where their expectations are not met, there are three courses of action: engagement, voting and divestment. Some may have to brace themselves for a bumpier ride in the 2021 AGM season.
With Covid-19 and Black Lives Matter bringing the social limb of ESG to the fore, there has been unprecedented momentum behind developments in the business and human rights space.
Previously viewed as the realm of NGO campaigns and CSR initiatives, legislation is now on the statute books in a number of jurisdictions, and regulators and industry alike are now working on numerous different proposals to step up efforts in this area.
Green bonds alone raised $210.2 billion in 2020, surpassing the $188.3 billion for 2019. Social bond issuance raised more than $163 billion in 2020, more than 10 times the $13 billion raised in 2019.
In fact, the growth of social bonds precipitated by the pandemic is outpacing that of green bonds.
Take a delve into our global ESG blog, Sustainable Futures, where you will find insights, commentary and news from our dedicated lawyers around the globe.
Each issue of our ESG Newsletter covers key developments on the full range of ESG topics.
Navigate to our media hub for Linklaters' global ESG practice. On this page you can access videos, webinars and podcasts in which experts from around the world discuss the key ESG issues of today.
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