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ESG is no longer a fringe issue – signals of hope at COP27

ESG is no longer a fringe issue – signals of hope at COP27

Kris Russell ESG Senior Manager Armanino LLP

COP27 Sharm el-Sheikh
One year ago, I arrived in Glasgow to join the largest global climate conference in history. Over 40,000 delegates from two hundred nations came together to advance climate action and the broader United Nations Sustainable Development Goals (SDGs) at COP26. As this year’s conference continues, I want to share an insider perspective and my optimism for progress.

Over the past year, the International Sustainability Standards Board (ISSB) was established and is developing the first global sustainability accounting standards (planned for release in early 2023). Additionally, the ISSB has integrated broadly accepted Environmental, Social, Governance (ESG) frameworks (i.e., SASB, TCFD) into the new standards to streamline and standardize reporting.  The future of ESG disclosure will be guided by the best practices from financial reporting improving transparency and driving global progress towards the SDGs.

Another great signal of momentum leading into COP27 are the Financial Sector commitments to sustainability. The U.N. Principles for Responsible Investment (PRI) now has over $130 Trillion in assets under management (AUM) with growth in green bonds projected to exceed $5 Trillion USD by 2025 (according to Bloomberg). There are also 33 global stock markets with mandatory ESG reporting rules to drive transparency through the operations and supply chain of over 20,000 global companies.

The commitments to sustainability are not only growing in public markets; the private equity sector has over $22 Trillion USD AUM committed to the ESG Data Convergence Initiative (according to the Institutional Limited Partners Association).

Do not despair as you read news of governments moving too slow at COP27. There are now eighty-three countries with net-zero targets representing 74% of global greenhouse gas emissions with forty-nine countries incorporating targets across all domestic sectors. There is more to the U.N. Climate Conference than just an assembly of government envoys. Organizations from all sectors also convene to share best practices that are transferable and scalable. I witnessed an incredible spirit of collaboration at COP26 and have no doubt that this will continue in Sharm el-Sheikh.