Why ESG is Now a Fiscal Imperative for Companies
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Posted On: 03/19/2025 4:24:24 PM
Why ESG is Now a Fiscal Imperative for Companies
Environmental, Social and Governance (ESG) frameworks have grown in importance these last couple of years as sustainability becomes a more significant concern for consumers, investors and corporations alike.
A recent survey even determined that ESG factors are increasingly being considered in M&A decisions, with dealmakers that don’t consider these factors being deemed financially irresponsible.
The increasing emphasis on ESG reflects a broader shift in the corporate landscape, with businesses being expected to operate transparently and responsibly, not just for ethical reasons, but also for regulatory and financial compliance. One major driver of this shift is regulatory action.
Just recently, the European Union enacted the Corporate Sustainability Reporting Directive, which makes it compulsory for companies to disclose information on the impact their operations have on society as well as the environment.
The objective of this directive is to standardize sustainability reporting, which helps ensure that stakeholders and investors have access to reliable and consistent data when evaluating the ESG performance of a company. Transparency in reporting not only influences market competitiveness and investment decisions but also improves corporate accountability.
Beyond the EU, firms in more than sixty countries are expected to begin publishing their first sustainability reports under the IFRS S1 and S2 standards. These sustainability disclosure standards by the International Financial Reporting Standards (IFRS) Foundation, are focused on bringing uniformity to ESG reporting.
IFRS S1 establishes general requirements for financial disclosures related to sustainability while S2 centers on climate-related disclosures, addressing opportunities and risks related to climate change.
Additionally, the financial impact of ESG factors is being recognized by rating agencies, with firms that fail to address these risks sometimes experiencing decreased investor confidence, lower credit ratings and higher capital costs.
This has seen more companies proactively incorporate ESG considerations into their strategic investment, planning and risk management decisions.
Overall, the growing regulatory focus on ESG reporting is expected to have huge implications. By strengthening global accounting standards and promoting collaboration between governments, regulators, and corporations, these changes will enhance corporate accountability and transparency.
Additionally, they will push businesses to integrate ESG opportunities and risk into their operational strategies, ultimately leading to more sustainable business practices.
It won’t be an easy journey though, particularly for firms in America. This comes as conservatives in the U.S. continue to target companies for their environmental policies and more businesses choose not to disclose sustainability information, primarily due to the fear of facing penalties for greenwashing.
As enterprises like First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) integrate ESG principles from the ground up, the fiscal benefits they record could spur other firms to become more forthcoming about their own sustainability efforts.
NOTE TO INVESTORS: The latest news and updates relating to First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) are available in the company’s newsroom at https://ibn.fm/FSTTF
Please see full terms of use and disclaimers on the ESGWireNews website applicable to all content provided by ESG, wherever published or re-published: https://www.ESGWireNews.com/Disclaimer
Environmental, Social and Governance (ESG) frameworks have grown in importance these last couple of years as sustainability becomes a more significant concern for consumers, investors and corporations alike.
A recent survey even determined that ESG factors are increasingly being considered in M&A decisions, with dealmakers that don’t consider these factors being deemed financially irresponsible.
The increasing emphasis on ESG reflects a broader shift in the corporate landscape, with businesses being expected to operate transparently and responsibly, not just for ethical reasons, but also for regulatory and financial compliance. One major driver of this shift is regulatory action.
Just recently, the European Union enacted the Corporate Sustainability Reporting Directive, which makes it compulsory for companies to disclose information on the impact their operations have on society as well as the environment.
The objective of this directive is to standardize sustainability reporting, which helps ensure that stakeholders and investors have access to reliable and consistent data when evaluating the ESG performance of a company. Transparency in reporting not only influences market competitiveness and investment decisions but also improves corporate accountability.
Beyond the EU, firms in more than sixty countries are expected to begin publishing their first sustainability reports under the IFRS S1 and S2 standards. These sustainability disclosure standards by the International Financial Reporting Standards (IFRS) Foundation, are focused on bringing uniformity to ESG reporting.
IFRS S1 establishes general requirements for financial disclosures related to sustainability while S2 centers on climate-related disclosures, addressing opportunities and risks related to climate change.
Additionally, the financial impact of ESG factors is being recognized by rating agencies, with firms that fail to address these risks sometimes experiencing decreased investor confidence, lower credit ratings and higher capital costs.
This has seen more companies proactively incorporate ESG considerations into their strategic investment, planning and risk management decisions.
Overall, the growing regulatory focus on ESG reporting is expected to have huge implications. By strengthening global accounting standards and promoting collaboration between governments, regulators, and corporations, these changes will enhance corporate accountability and transparency.
Additionally, they will push businesses to integrate ESG opportunities and risk into their operational strategies, ultimately leading to more sustainable business practices.
It won’t be an easy journey though, particularly for firms in America. This comes as conservatives in the U.S. continue to target companies for their environmental policies and more businesses choose not to disclose sustainability information, primarily due to the fear of facing penalties for greenwashing.
As enterprises like First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) integrate ESG principles from the ground up, the fiscal benefits they record could spur other firms to become more forthcoming about their own sustainability efforts.
NOTE TO INVESTORS: The latest news and updates relating to First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) are available in the company’s newsroom at https://ibn.fm/FSTTF
Please see full terms of use and disclaimers on the ESGWireNews website applicable to all content provided by ESG, wherever published or re-published: https://www.ESGWireNews.com/Disclaimer
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