“Ignore climate problems and you will go bankrupt”
Investment costs for companies that fail to consider ESG – environmental, social and governance factors – are rising, according to Ali Cambray, director, ESG and net zero, at PwC Channel Islands.
Speaking at a breakfast seminar hosted by the Guernsey Institute of Directors, she also highlighted a ‘tidal wave’ of climate-related regulation – including around reporting and disclosures business – as well as pressure for change from investor and consumer groups.
Asked by the Guernsey press whether companies were ‘doomed’ if they failed to act, she pointed to what former Bank of England governor Mark Carney had said on the matter.
“Mark Carney says companies that don’t will go out of business. Absolutely, yes, in the long run,” she said.
“They will be irrelevant and this will ultimately lead to bankruptcy.” Absolutely, there are winners and losers.
She added that companies that fail to act would lose opportunities in the transition to a green economy or it would be business failure due to not adapting to climate risk and the physical effects of what that would mean. “Whatever the policy, it’s a matter of relevance,” she said.
At the seminar, which was held at the Old Government House hotel, she also highlighted other factors that companies need to consider. ‘Why bother thinking about ESG issues as a company? It really reflects broader trends around a shift from shareholder capitalism to stakeholder capitalism, regulatory pressure, investor pressure, consumer pressure and just plain good business sense.
“There has been a tidal wave of regulation at EU level, at UK level and even in Guernsey here, where you have now introduced measures to encourage climate disclosure.
“This is a very fast-paced regulatory program – and it’s really important for companies to stay ahead of the game and think strategically around this.”
There were also trends around finance “around the increased cost of capital for companies that don’t consider ESG factors and a lower cost of capital – a really interesting innovative range of low cost finance carbon emissions for those who act”.