{"id":23107,"date":"2025-01-31T11:00:48","date_gmt":"2025-01-31T11:00:48","guid":{"rendered":"https:\/\/www.insurancejournal.com\/?p=810325"},"modified":"2025-01-31T11:00:48","modified_gmt":"2025-01-31T11:00:48","slug":"corporate-irritation-over-esg-fueled-by-significant-costs","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2025\/01\/31\/corporate-irritation-over-esg-fueled-by-significant-costs\/","title":{"rendered":"Corporate \u2018Irritation\u2019 Over ESG Fueled by Significant Costs"},"content":{"rendered":"<p><img decoding=\"async\" src=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2025\/01\/solar-panels-at-bolivar-technological-university-in-colombia-bloomberg-580x387.jpg\"><\/p>\n<ul class=\"nav nav-tabs tabs tabs-entry\">\n<li class=\"active\"><a href=\"https:\/\/www.insurancejournal.com\/news\/international\/2025\/01\/31\/810325.htm\">Article<\/a><\/li>\n<li><a href=\"https:\/\/www.insurancejournal.com\/news\/international\/2025\/01\/31\/810325.htm?comments\" rel=\"nofollow\">0 Comments<\/a><\/li>\n<\/ul>\n<div class=\"article-content clearfix\">\n<p class=\"bloomberg\">As ESG rapidly morphs into one of the least-loved labels in global finance, those monitoring the development say it\u2019s not all down to ideology.<\/p>\n<p>Instead, annoyance with environmental, social and governance metrics has grown along with regulatory requirements around ESG data, according to <a href=\"https:\/\/www.dlapiper.com\/en\/people\/t\/tamlyn-alex\" target=\"_blank\" rel=\"noopener noreferrer\">Alex Tamlyn<\/a>, partner at DLA Piper and chair of the law firm\u2019s boardroom counsel practice.<\/p>\n<div class=\"bzn bzn-sized bzn-intext\">\n<ins data-revive-zoneid=\"79\" data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>\u201cThere are some naysayers, flat Earthers if you like,\u201d Tamlyn said in an interview. \u201cBut there\u2019s probably more generally an irritation because, to respond to the regulatory obligation,\u201d companies need to produce a lot of data, and \u201cthat means you\u2019ve got to spend money on getting it,\u201d he said.<\/p>\n<p>The comments come as the European Union looks set to roll back some of its ESG requirements in response to concerns from its two biggest economies. <a href=\"https:\/\/eur-lex.europa.eu\/legal-content\/EN\/TXT\/?uri=CELEX:32022L2464\" target=\"_blank\" rel=\"noopener noreferrer\">The Corporate Sustainability Reporting Directive<\/a> is now on track to affect far fewer companies than originally intended, after small and mid-sized firms balked at the sheer volume of the data demands they had faced.<\/p>\n<p>The EU is due to tackle the directive together with several other pieces of legislation at the end of next month, as part of its so-called omnibus process.<\/p>\n<p>At the same time, asset managers trying to screen for ESG risks have found they\u2019re generally better off getting their data directly from companies, as other avenues fall short. Fresh research by DLA Piper and the Cambridge Institute for Sustainability Leadership indicates that shareholder proposals usually fail, and ESG ratings are often an inadequate guide.<\/p>\n<p>As a result, asset managers are increasingly relying on direct, private interactions, according to the research, which looked at how asset managers and corporate boards tackle ESG challenges.<\/p>\n<p>\u201cThe aggregation of data, the production of ratings and corporate governance indexes is notoriously not regulated,\u201d Tamlyn said. \u201cSo you stand a better chance of getting better quality data if you have a private engagement for which you are responsible.\u201d<\/p>\n<div class=\"bzn bzn-sized bzn-intext-2\">\n<ins data-revive-zoneid=\"162\" data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>Researchers plowed through databases to identify just over 37,000 proposals made at annual general meetings during the 10-year period ended in June 2024. Of those, 10% were ESG-related \u2014 and most failed.<\/p>\n<p>Asset managers, meanwhile, have been stepping up direct engagement with companies. Between 2020 and 2023, engagement increased by almost 40%, according to the research, which focused on the stewardship activities of 40 of the world\u2019s largest asset managers.<\/p>\n<p>At the same time, there\u2019s evidence to suggest that fund managers devoting lots of energy to their ESG strategies aren\u2019t necessarily being rewarded by investment clients. Funds complying with the EU\u2019s strictest ESG standards suffered record outflows last quarter, according to a research from Morningstar Inc.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-810327 aligncenter\" src=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2025\/01\/green-energy-investments-have-underperformed-bloomberg-580x326.jpg\" alt width=\"580\" height=\"326\" srcset=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2025\/01\/green-energy-investments-have-underperformed-bloomberg-580x326.jpg 580w, https:\/\/www.insurancejournal.com\/app\/uploads\/2025\/01\/green-energy-investments-have-underperformed-bloomberg-300x169.jpg 300w, https:\/\/www.insurancejournal.com\/app\/uploads\/2025\/01\/green-energy-investments-have-underperformed-bloomberg-768x432.jpg 768w, https:\/\/www.insurancejournal.com\/app\/uploads\/2025\/01\/green-energy-investments-have-underperformed-bloomberg.jpg 1200w\" sizes=\"(max-width: 580px) 100vw, 580px\"><\/p>\n<p>Some of the \u201cinertia\u201d that boards are displaying \u201ccomes from a lack of comprehension as to where to start,\u201d Tamlyn said. \u201cIf you\u2019re advising FTSE 100 or FTSE 250 companies, the budget that\u2019s available to mount a very sophisticated response to ESG challenges is usually pretty substantial,\u201d but that\u2019s not the case for smaller companies, he said.<\/p>\n<p>However, companies that choose to ignore ESG do so at their own risk, Tamlyn said.<\/p>\n<p>\u201cThere is an intrinsic reality about the environmental continuum, which is bigger than the opinions of any president or any country or any industry sector or any board in the world,\u201d he said. \u201cThe consequences of that choice will be visited upon any business, any sector, any geography in the world.\u201d<\/p>\n<p><em>Photograph: Photovoltaic panels at a solar farm at the Bolivar Technological University (UTB), in partnership with Promigas SA, in Cartagena, Bolivar department, Colombia, on Thursday, Nov. 21, 2024. 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Instead, annoyance with environmental, social and governance&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":23108,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[4,1299,1300,340,1301,1302,569,24,1],"jetpack_featured_media_url":"https:\/\/blog.lifeinsurance-orleans.ca\/wp-content\/uploads\/2025\/01\/corporate-irritation-over-esg-fueled-by-significant-costs.jpg","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/23107"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=23107"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/23107\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media\/23108"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=23107"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=23107"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=23107"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}