What's next?

We expect to see soft laws evolving into hard laws in numerous areas of ESG, in particular: engagement with indigenous peoples and protection of cultural heritage; racial discrimination; biodiversity impacts and water scarcity; and cyber and data governance. So understanding, and committing to, standards set out in international law makes good business sense – it is integral to building a robust ESG culture and essential in preparing your organisation for the inevitable introduction of domestic laws that take their guide from these international standards.

The increase in domestic regulation of ESG issues will place stronger pressure on companies to commit to global standards

across their operations and supply chains and will likely be accompanied by greater regulatory enforcement and third-party litigation. Meanwhile, institutional investors, shareholders and community groups will continue to expect companies to report publicly against international and soft law standards to which they say they align. The rise in shareholder activism seeking disclosure on corporate alignment with the UN Guiding Principles and climate change commitments (such as alignment with the goals of the Paris Agreement or winding up of fossil fuel operations) demonstrates this trend.

Once ESG policy positions are established, the next step – and perhaps the more challenging one – is ensuring that the organisation then lives and breathes by these policy commitments to the full extent possible.