While COP27 didn't seem to have quite the media splash that COP26 created in 2021, it is possible that the conference, which took place just a few weeks ago in Sharm El-Sheikh, Egypt, may end up being equally, if not more impactful, in real terms. Not only did it build on the previous conference's outcomes, but it also saw attendees agree on how to implement them and deliver the Paris Agreement to strengthen the global response to the threat of climate change.
The primary outcome of COP27 was the agreement to provide 'loss and damage' funding for vulnerable countries whose lives and livelihoods are hit hardest by climate change. This ground-breaking decision to enable Just Transition will see governments worldwide collectively invest billions of dollars into providing developing countries with the means to create adaptation solutions. This included boosting finance support in vulnerable regions and launching a five-year work programme to promote climate technology solutions in developing locations and institutional arrangements to catalyse technical assistance in those areas.
In addition, COP27 delivered a package of decisions that reaffirmed participating countries' commitment to cutting greenhouse gases and limiting the rise of global temperature to 1.5 degrees Celsius.
How does it affect business?
The responsibility for delivery of the outcomes largely falls to governments; however, successful implementation will require the transformation of financial systems and processes, which means engaging with central banks, commercial banks, investors and other financial institutions.
In addition to this, many of the decisions and agreements made at COP27 will affect businesses directly as they are transformed from concepts into new policies and regulations, which will filter down from the conference through individual governments to organisations that will need to ensure they are compliant with any new climate rules and emission targets.
Furthermore, according to recent reports, 64% of the public believe that businesses should be playing a pivotal role in helping to solve climate change issues, and the general societal feeling is that across the range of disruptive forces, the world is facing, the most significant responsibility on climate change falls to businesses.
Therefore, it would seem that companies must take real action to do their part to protect the planet from an ethical standpoint to remain compliant in the face of ever-changing regulations, coupled with firms ensuring that they are effectively communicating their eco credentials in the public domain to build and maintain their brand reputation.
How does it affect the job market?
With the business world directly affected by the outcomes of COP27, many companies are becoming increasingly focussed on their ESG activities. Roles within governance and compliance focusing on sustainability issues and ESG reporting can help companies navigate new laws and requirements and ensure that their environmental policies are up to scratch to attract responsible investors and climate-conscious clients.
Companies may be looking to grow their governance teams following COP27, but there may also be greater opportunities opening up in Green Tech as the five-year work programme to promote climate technology solutions is implemented alongside the commitment to offer technical assistance in developing countries. There is even a growing role within marketing for ESG-related work as companies strive to successfully communicate their green credentials and strategies to investors and customers alike.
Evidence shows the growing job market in ESG-related roles, with the FCA appointing six new board members to their ESG Advisory Committee a few weeks ago. Many law firms are also recruiting more ESG specialists as demand increases for expertise in fund formation, private equity, corporate governance and mergers and acquisitions.
Other emerging roles include ESG advisors, who not only look at the practical side of ESG, such as compliance and reporting but also look at CSR strategy to identify good causes with which businesses may want to associate themselves with and have their employees get involved with. ESG Internships could also be a way into the future job market, with Morgan Stanley and PwC already offering ESG-related internships for analysts.
The real hurdle for businesses is moving from simply acknowledging the importance of ESG to taking real action to affect change. In a recent survey, a vast 77% of global finance leaders said that their CFO is mostly or entirely responsible for realising the opportunity of developing new technologies and innovations to share sustainable outcomes. However, only 48% of respondents believed their finance team has the skills and competencies needed to support their ESG efforts and 82% either don't assess ESG competence during recruitment or promotions or only do so when recruiting for specialist roles.
The report also found that 81% said ESG information is important in their organisations' decision-making. Still, two-thirds believe their organisation needs more reliable tools and techniques to make this happen.
With greater demand for ESG professionals across various sectors and disciplines, the job market could be set for a pretty sizable, eco-driven boost. Still, companies must turn their words into actions to keep up with the changing landscape of ESG and become genuinely ethical and sustainable organisations doing their part to support the outcomes of COP27.
If you are an ESG professional or looking to grow your governance or compliance teams, talk to our expert recruiters at McGregor Boyall today to find out how we can help you.