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Mid-market CEOs are putting ESG practices into the heart of their global expansion strategies
These days, no company can afford to ignore ESG, and these concerns may be heightened by a move to a new country where it’s important to understand the specific environmental and cultural nuances of the area.
Even small and medium-sized businesses that may not need to report to shareholders or make disclosures to regulators on such matters must be transparent and above board in their dealings with other stakeholders such as customers, staff, suppliers and local communities. Getting it right makes good business sense, but getting it wrong could be disastrous, with loss of business value, reputational damage and even financial sanctions among the consequences.
So it’s encouraging that the vast majority of respondents (93%) in the latest mid-market research carried out by Kreston Global, the interpreneur report, do or would consider ESG practices to a greater or lesser extent when considering counties or regions to expand into.
It’s notable that the proportion that says they do or would prioritise ESG without qualification is highest in China (64%), Nigeria (62%), South Africa (54%) and the US (53%) and lower in Germany (18%), Japan (19%), Spain (14%) and France (15%).
Across age demographics, the proportion of respondents who said they do or would prioritise ESG issues without qualification rises with age, peaking at the 35-44 age bracket before falling sharply in the older age range.
ESG is not a nice to have or a tick-box exercise: it’s an obligation for the next generation and a commercial imperative. An ESG strategy must be based on scientific data and prioritise impacts. Failing to factor it into your business operations exposes you to real risks. So it’s important to take proactive measures like evaluating and minimising your environmental impact and adhering to fair labour practices to safeguard your business against legal and compliance issues, keeping competitivity and ensuring you avoid negative press which could cause irreparable harm to your brand.
Overlooking ESG could also cause you to miss out on opportunities. A well-defined ESG strategy is not a cost but an investment that should position you favourably in your new market, attracting potential customers and investors who prioritise sustainability and ethical practices. It can open doors to new partnerships and collaboration prospects, accelerating your growth and integration within the new market.
Laurent Le Pajolec , Member of Board EXCO A2A Polska and Kreston Global ESG Committee member, Interpreneur Report 2024
Latest ESG news
The European Parliament approved the CSDDD
The European Parliament approved the Due Diligence Directive on Business Sustainability. It promotes corporate responsibility, human rights, and environmental protection. The implementation will start in 2027 for large enterprises.
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CSRD - Fundamentals: The Definitive Guide to CSRD
The Global Reporting Initiative (GRI), MEP Pascal Durand, and the Lefebvre-Sarrut Group have launched a publication on the Corporate Sustainability Reporting Directive (CSRD). The publication consists of 11 briefings explaining the new directive, with collaboration from Accountancy Europe.
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Guidance on interoperability between ESRS and ISSB standards
The ISSB and EFRAG have collaborated to produce an Interoperability Guide to help promote the alignment of their distinct approaches to sustainability reporting standards. For example, they differ in their materiality thresholds.
Preparing accountants for sustainable development reporting: IFAC proposes improvements to international education standards
The International Federation of Accountants (IFAC) has published proposed changes to the International Education Standards (IES) that integrate sustainability – from analysis to reporting and assurance – into the professional training of future accountants.
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A new general framework of economic governance fit for the future is coming into force.
The EU's new economic governance framework, aiming to enhance debt sustainability and promote inclusive growth in member states, came into force on April 30, 2024. It marks the most ambitious reform of EU economic governance rules since the financial crisis.
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Joint Statement by the IAASB and IESBA Chairs on the ISSB's New Jurisdictional Adoption Guide
On May 28, 2024, new evidence emerged of the global push towards publishing sustainability information. The International Sustainability Standard Board (ISSB) has published new guidance to help jurisdictions adopt its sustainability reporting standards, S1 and S2, and announced that more than 20 jurisdictions plan to incorporate these standards into their legal frameworks.
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EC Communication on managing climate risks to protect people and prosperity
The EC issued a communication on climate risk management in conjunction with the initial EU-wide climate risk assessment by the EEA. AEM highlights the need for the CSRD to require companies to explain the interaction between the two aspects of the double materiality threshold. The EC's communication outlines action points in four main categories.
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The EP approves a new certification system for the elimination of carbon dioxide emissions from the atmosphere.
On April 10, the European Parliament adopted a voluntary certification system for removing carbon dioxide emissions from the atmosphere. The Council still needs to approve the text before it can be published in the Official Journal of the EU.
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The ISSB has set its priorities for the next two years
The ISSB has outlined its two-year plan, prioritizing the implementation of IFRS on Sustainability and starting new research and standard-setting projects.
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Companies see sustainability as essential to creating long-term value
The Morgan Stanley Institute for Sustainable Investing's report underscores the business imperative of sustainability. It suggests that companies are increasingly prioritising sustainability strategies for value creation, with investor support playing a crucial role. However, the report also highlights the need for greater sustainability expertise at the board level.
Increasing expectations of institutional investors
The role of institutional investors in corporate governance is expanding globally, with a focus on the increasing concentration of shareholding. European asset managers, often controlled by banks or insurance companies, show greater dedication to ESG issues than their US counterparts: cost, class action issues, client preferences, and regulatory backlash in the US influence this.
New publication: Family-controlled firms and environmental sustainability
The paper, developed by ECGI as part of the Finance Working Paper Series, offers a new interpretation of previous evidence that family control negatively correlates with environmental performance.
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Kreston Global has launched ESG services to support mid-market businesses expanding globally.