The future of our planet’s biodiversity looked a little brighter last week. After nearly 20 years of talks, and 36 hours of high intensity negotiations at the UN’s headquarters in New York, USA, nearly 200 countries signed the High Seas Treaty. This new agreement will for the first time protect marine life in international waters.

The treaty contains legal mechanisms to protect the ocean’s biodiversity via creating sanctuaries. There will also be environmental checks to evaluate the potential damage of commercial activities, such as deep sea mining, as well as limits on fishing and shipping routes. The treaty will also support the recent Kunming-Montreal Global Biodiversity Framework, which aims to conserve 30% of the world’s land marine habitat by 2030.

This treaty highlights once more the importance of climate change, biodiversity and nature-based solutions for communities and countries everywhere. For board directors and senior business leaders to better tackle these many environmental, social and governance (ESG) risks and opportunities, their best route forward is getting themselves educated, and quickly. Our range of ESG and Climate & Biodiversity programs provides a world-class solution for these top-table dilemmas. 

As always, please keep your news tips and suggestions coming to or join the conversation on LinkedIn when we post this weekly digest. 

1. Putting ESG in context. Ernst & Young LLP has just released The C-suite Insights: Sustainability and ESG Trends Index. This report, based on a survey with more than 500 C-suite executives of Fortune 1000 companies, found that the vast majority (87%) see ESG and sustainability initiatives as very or extremely important to their businesses and long-term success. A similar number (86%) reported that their board of directors had oversight to the company’s sustainability and ESG agenda. In terms of emerging ESG and sustainability risks, the respondents placed environmental top, followed by technological, economic, political and societal. The top four internal ESG and sustainability initiatives at these companies were employee health and wellbeing; economic impact; diversity and inclusion; and human rights. 

2. All eyes on California. On March 15, the first hearings will take place in the Golden State for the Climate-Related Financial Risk Act (SB261) and the Corporate Climate Data Accountability Act (SB253). SB261 would require non-insurance American financial entities that operate in California with revenues greater than US$500 million to deliver a climate-related financial risk report. Those companies would also have to  disclose what measure they have to adapt climate-related financial risk disclosures. SB253 would require all American businesses that do business in California and with more than US$1 billion in annual revenue to publicly and annually disclose their Scope 1, 2 and 3 greenhouse-gas emissions. The state’s emission registry or an approved third-party auditor would then independently verify them. Both of these would supplement the SEC’s proposed climate disclosure regulations. With California on the threshold of becoming the world’s fourth largest economy, passing these acts (with first disclosures due in 2024 and 2026) would be another big step on the path to net zero. 

3. Greenwashing precedent Down Under. The Australian Securities & Investments Commission (ASIC) has launched a court action against Mercer Superannuation, alleging it has made false claims about some of its sustainable investment choices. The legal proceedings are the first of their kind in Australia focused on greenwashing. According to ASIC, Mercer’s Sustainable Plus fund invested in 15 fossil fuel companies, including BHP, 18 gambling stocks and 15 alcohol companies including Budweiser and Heineken. ASIC had warned late last year that it was cracking down on climate-related reporting and already had several companies and financial institutions in its sights. Mercer Superannuation is just the first domino to potentially fall. “There is increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing,” said Sarah Court, ASIC Deputy Chair, in a press statement. “If financial products make sustainable investment claims to investors and potential investors, they need to reflect the true position.”

4. Flooding the market. A new study published in Nature Climate Change reveals the hidden potential cost of climate change on the US housing market. The research estimates that residential property prices in flood zones are overvalued by between US$121 to 237 billion. The study also delves into the impact of unpriced flood risk in other parts of the country on communities and local governments, with low-income households especially vulnerable to their homes suffering steep devaluation. Currently, more than 14.6 million American residential properties have a one in 100 chance of being flooded, with the expected annual damages to residential properties exceeding US$32 billion. The study suggests that the housing market is massively mispricing these risks, causing it to overinflate. Flood risk is not just a problem for homeowners, but entire communities and cities that will have to carry the costs.

5. Digging up new benchmarks. GRI has published a draft Mining Standard, which is now open for public comment. Mining attracts a lot of attention around ESG risks and opportunities, yet is central to the supply of rare-earth minerals needed for the world’s net zero transition. The draft identifies 25 material topics that have the greatest potential impact on the mining industry, including: climate change; greenhouse gas emissions; biodiversity; water usage and waste; community engagement; human rights; Indigenous Peoples’ rights; land and resource rights; modern slavery; forced labour; anti-corruption and procurement. The public comment period closes on April 30, 2023.

Mathew Loup is Competent Boards’ Director, Marketing & Communications. Follow Competent Boards on LinkedIn.

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