Russia’s invasion of Ukraine has triggered ripple of shocks through a broad spectrum of industries, creating uncertainties which are likely to derail companies’ emissions target but companies that can balance ESGs, Covid-19, and geopolitical priorities stand to gain the most, according to GlobalData.
By using this approach instead of episodically concentrating on one form of disruption, companies can essentially cope with the ongoing disruption. The leading data and analytics company found in a recent survey that COVID-19 will continue to dominate the attention of businesses in 2022, with 69 per cent of respondents indicating that it will have a high impact on their business in the next 12 months.
Despite the fact that a large number of companies, representing 67 per cent said COVID-19 was a catalyst for an increased focus on ESG, the International Energy Agency (IEA) recently reported that 2021 saw the highest absolute increase in CO2 emissions ever recorded. While this is surprising, ESG once again is slipping down companies’ agendas due to the ongoing Ukrainian crisis which remains a significant issue, according to GlobalData.
Companies Assess Contributions to GHG Emissions
The IEA report painted a bleak picture, despite the growing emphasis on green recovery in recent years. In 2021, global-energy related carbon emissions increased by 6 per cent, reaching 36.3 billion tonnes. This was the largest absolute carbon emissions ever recorded. This is due to a lot of countries across the world, pursuing fossil-fuel-induced recovery from the pandemic.
Francesca Gregory, Associate Analyst at GlobalData, said:
“While many lessons can be learnt from COVID-19, the pandemic revealed our struggle as a society to cope with more than one emergency. Companies are encountering the same problem. In GlobalData’s recent thematic report, ESG Strategy Survey 2021, COVID-19 was singled out as the most disruptive threat, with 69% of respondents saying it would have a high impact on their businesses over the next 12 months.”Francesca Gregory
That aside, the current situation also represents an opportunity for companies to demonstrate their responsibility to respond to change. Companies such as Apple, Microsoft, Nike, Visa, Mastercard, and McDonalds have all looked within their operations and supply chains to assess their contribution and react accordingly.
“Companies that can detach from episodically focusing on one disruptive threat and instead balance ESG, geopolitics, and pandemic priorities will be the most resilient. Flexibility is no longer just nice to have, it will be a necessity for withstanding the current uncertainty.
“A combination of geopolitical tensions, rising ESG scrutiny, and the potential for viral resurgences will demand a rapid reconfiguration of supply chains. Companies that fail to respond to change will face disruption in their operation as well as a potential backlash from consumers.”Francesca Gregory
In a similar study, GlobalData found that 80 per cent of respondents reported their companies plan to increase spending on ESG issues to meet targets between 2021 and 2026, while 78 per cent of medical device sector companies plan to increase ESG investments over the same period. If this is anything to go by, it represents a big opportunity for companies to contribute to reducing carbon emissions.