ESG and sustainability consulting market to hit record $16 billion 

Spending by companies on ESG and sustainability consulting is set to more than double over the next five years to a record $16 billion, a new report from leading independent research and advisory firm Verdantix forecasts.

The market will grow at a CAGR of 17%, Verdantix analysis shows, from around $6.24 billion at the end of last year with regulatory change and pressure from stakeholders combining with GDP growth and policy development to boost all regions and sectors.

Growth will be strongest in the EMEA region with North America and APAC close behind. All ESG and sustainability consulting services are expected to achieve double digit growth over the period but corporate reporting and disclosures will see the biggest increases with a CAGR of 21%.

Verdantix’s report ESG and Sustainability Consulting: Market Size and Forecast 2021–2027 expects further steps in ESG mandatory disclosures by the creation of new laws or updates to previous national regulations.

It highlights how, with the regulatory requirements setting a framework for sustainability initiatives, firms will recognize fundamental changes in their business model, operations, and strategy.

Verdantix Research Director and report author, Kim Knickle, said: “Over the next five years, businesses will have to reorientate themselves around ESG and Sustainability priorities. This represents a complex challenge that will take place against a rapidly evolving regulatory backdrop. As a result, consultancies stand to benefit as firms look for external expertise to help them achieve transformational change and more rigorous standards of reporting.”

These initiatives will include demand for product innovation and stewardship as well as supply chain sustainability improvements and increased scrutiny on resource requirements and greater transparency. In addition, ESG factors will become more integrated into investment and M&A decision making.

MAF finance group announce two new relationship directors

MAF finance group has appointed two new relationship directors to meet increased demand for sustainability finance solutions within the agricultural sector across the UK.

Andrew Casey joined MAF Finance Group earlier this year and moves to join the agricultural, renewable and sustainability team where he will bring his energy and enthusiasm to arrange funding for farmers looking to transition to a net zero future. Andrew boasts 16 years’ of experience in finance where he started his career with Lloyds Bank. Since then Andrew has worked for lenders such as RBS, Close Brothers, Ultimate Finance and Simply before becoming a finance broker with Anglo Scottish. His asset finance experience has previously been in printing, transport and yellow plant and he will transfer his knowledge, experience and contacts across the finance sector to help fund renewable technology projects.

Dawn Hanson joins with a wealth of renewable energy experience having worked with the asset finance provider Lombard at the start of her career helping to fund solar, biomass and wind projects. Across her career she has worked with dealers, vendors, brokers, and end customers to offer finance solutions for all types of agricultural and ground care machinery, including a lot of experience gained at John Deere Finance and De Lage Landon. Dawn has now returned to her roots looking after opportunities within the renewable sector and is already supporting green energy projects including anaerobic digestion across her portfolio.

Both new recruits will be based out of MAF’s head office in South Normanton, Derbyshire, supporting farmers across the UK.

Energy & Environment Alliance partners Optimised Energy to reach Net Zero carbon

The Energy & Environment Alliance (EEA), a not-for-profit coalition of hospitality sector leaders that is developing the world’s most reputable sustainability assessment scheme for Hotel and Apart Hotel assets, today announced its partnership with Optimized Energy (OE). OE is a green tech company operating across the UK to deliver premium voltage optimisation products for commercial real estate including the hotel and accommodation industry.

Joining the EEA in its quest to apply a rigorously scientific and commercially sustainable approach to meet Net Zero Carbon and Environmental, Social and Governance (ESG) standards, OE will advise EEA members of their suitability for Voltage Optimisation (VO). VO is an engineer-led solution for immediate reduction of energy consumption, reducing operational costs and bringing down scope 1 & 2 carbon emissions. The OE team brings a wealth of renewable technologies and electrical engineering expertise to further help EEA members transition to net zero carbon pathways and improved ESG performance in assets and operations.

Ufi Ibrahim, CEO, EEA, said: “In the UK, a high voltage supply from the National Grid is a common problem causing heat stress and premature degradation of equipment, along with up to 19% costly power wastage. We are delighted to partner with OE, where hotel asset owners can benefit from their expertise in energy wastage reduction. The pursuit of carbon cutting targets is more vital than ever, as energy prices are soaring and new legislation, mandating disclosure in line with the Task Force on Climate-related Financial Disclosures (TCFD) is coming into force.”

Deborah Faulkner, Business Development Director of OE said, “Optimized Energy shares the intention of the EEA to pioneer innovation, know-how and best practice in reduction of energy consumption for the hotels and accommodation sector. Voltage optimisation has helped thousands of businesses reduce their energy consumption and C02 emissions in the UK, where high voltage can be a serious and costly issue. With current tax relief at 130% for capital asset investments, hoteliers can benefit greatly from investing in VO for immediate lowering of operational and maintenance costs, helping them remain commercially sustainable in a recovering market.”

CFOs unite in call for globally aligned sustainability disclosure standards

In advance of the International Sustainability Standards Board (ISSB) consultation on proposed global standards for sustainability disclosures opening 29th July, over 80 CFOs, from Asia, Europe, North and South America have united in calling for global alignment on sustainability reporting, and for the ISSB to improve upon their proposed standards in six areas.

The letter was convened by A4S and submitted to the ISSB. Based on the signatories' experience in providing both financial reporting and sustainability-related disclosures, the group has set out in the letter six areas for the ISSB to address to achieve effective sustainability reporting standards. These are:

  • Align with relevant existing and emerging sustainability reporting standards to ensure harmonization and convergence, to the greatest extent possible.
  • Consider the dynamic, industry-specific nature of materiality and provide clarity around the assessment of users’ expectations on what constitutes enterprise value, recognizing that investors may need disclosures on broader social and environmental impacts to assess risk and inform investment decisions.
  • Have clear definitions and guidelines that enable preparers to report in a transparent, consistent and comparable manner.
  • Recognize that reporting is a means to an end, not an end in itself. It is essential that the disclosure requirements enable and encourage a continued focus on setting science-based, ambitious targets and the actions needed to achieve them. There is a risk that, if the expectation in the short term is for equivalent data quality as achieved within financial reporting, then ambition will be lowered and resources will be diverted into reporting instead of action.
  • Connect to financial reporting standards and promote integrated thinking as illustrated through frameworks such as the Integrated Reporting Framework.
  • Address the broad set of environmental, social and economic issues that materially impact decision making.

Integrated global reporting disclosures are key because robust, comparable and decision-useful information is vital for investors, and others, to assess an entity’s performance and impact, supporting the allocation of capital needed to achieve a sustainable global economy. Sustainability factors can present both risks and opportunities to organizations, but without the right information neither businesses nor investors will be able to make fully informed decisions.

Jessica Fries, Executive Chair, A4S commenting on the response said, “Reporting is not an end in itself. Global alignment on sustainability disclosure standards is needed so that organizations can focus on action, rather than reconciling the ‘alphabet soup’ of requirements across jurisdictions. This is why the IFRS and other standard setters need to listen to the call from CFOs and investors to establish a common set of global standards which will provide the information needed to deliver ambitious targets and action.

George Quinn, Group Chief Financial Officer, Zurich, signatory to the response said, “Businesses and investors need transparency and consistency to be able to invest in a sustainable future. The adoption of a common set of sustainability standards is pivotal in meeting these needs and no one is better positioned than the ISSB to play this role globally. Time is running out and the business and finance community need to meet the moment. Let’s seize this opportunity to achieve global alignment through the proposed ISSB standards so that companies and investors can focus on action.”

AICPA & CIMA appoint Jeremy Osborn as Global Head of ESG

The Association of International Certified Professional Accountants (the Association), representing the unified voice of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA), has appointed Dr. Jeremy Osborn, FCMA, CGMA, CPA (Aust.), to the newly created role of Global Head of Environmental, Social and Governance (ESG) matters.

In his new role, Osborn will lead the Association’s ESG strategic initiative, which will enhance the broad skillsets of global accounting, auditing and finance professionals, positioning the organisation as the leading voice, influencer and thought leader as sustainability-related financial disclosure reporting standards are crafted and implemented.

Osborn will be based in London and report to Ash Noah, FCMA, CGMA, CPA, the Association’s Vice President and Managing Director for Management Accounting.

“This is a key strategic area for our association and the global accountancy profession,” Noah said. “Jeremy has deep experience in ESG, a strong record of accomplishment and direct experience of engaging with the relevant stakeholders in this category. The main focus of his job will be to help both our management accounting and public accounting professionals integrate ESG matters into their strategy, operations and reporting.”

Osborn joins the Association from the Value Reporting Foundation (VRF), for which he served as Director of Accountancy Relationships. At the VRF, he worked with accountancy bodies and leading accounting firms to increase the pace and scale of adoption of integrated reporting, integrated thinking and sustainability accounting standards across the globe. Prior to that, Osborn worked at EY, The Prince’s Accounting for Sustainability (A4S) Project and Accenture, supporting a wide range of organisations to connect their sustainability and climate strategies with their core business objectives. Osborn began his career in commercial management with Unilever.

Climate crisis: Investors snap up sustainable funds as temperatures soar

Emma Wall, Head of Investment Analysis and Research comments, “The UK has been brought to a standstill by soaring temperatures, as offices close, trains are cancelled and emergency services are put under increasing pressure. The Met Office has warned that heatwaves will happen far more frequently than in the past, and climate change is to blame. The stock market reaction has been muted, but investors should take heed – extreme weather is bad news for economic growth.

The impact of storms on the US economy is well-documented, and each hurricane season is estimated to cost the country around $1 billion. And while hurricane destruction is more physical than a heatwave, there are similar productivity implications for periods of extreme heat.

Luckily, there are ways for governments, policymakers and regulators to mitigate the risks, and halt global warming, but it takes dedication and investment. Investment that retail investors have already begun to make. Over the last couple of years, Investment Association figures have shown responsible investment funds climb from being niche players to the most popular in terms of flows.

The top 20 monthly most sold funds with Hargreaves Lansdown clients – for many years awash with global and tech funds – now regularly feature ESG options. As temperatures have risen over the last six weeks, across the responsible investing universe of impact, ESG, ethical and sustainable funds, two of the most popular funds are those that invest in clean energy. These are providing essential investment to wean the world off fossil fuels and tackle the climate crisis.”

Top 10 Responsible Investment Funds
(Number of Buys, Alphabetical)

Aegon Ethical Equity Fund

Baillie Gifford Positive Change

EdenTree Responsible and Sustainable Managed Inc

Fidelity Sustainable MoneyBuilder Income

Fundsmith Sustainable Equity

Guinness Sustainable Energy

Legal & General Future World ESG Developed Index

Stewart Inv Asia Pacific Leaders Sustainability

Stewart Inv Indian Subcontinent Sustainability

VT Gravis Clean Energy Income