Environmental, social and governance (ESG) issues are now on every organization’s radar — but the need to align ESG with financial performance poses an urgent challenge for the industrial sector (pdf) in particular.
The U.S. Securities and Exchange Commission (SEC) recently proposed rules that will require detailed climate-related disclosures in annual filings. This impacts the industrial sector significantly. According to the World Resources Institute, three industrial subsectors are the fastest-growing sources of greenhouse gas (GHG) emissions: since 1990, emissions from industrial processes grew by 187%, followed by transportation (+79%) and manufacturing and construction (+56%). The indirect impact is even larger.
Despite these warning signs, the industrial sector appears to be falling behind in terms of sustainability performance. Many actions individual firms have taken, such as increasing environmental reporting and setting emissions reduction targets, are increasingly seen as minimum requirements. Companies not making additional efforts in the short term are unlikely to meet stakeholder expectations in the medium or long term.
To read more about how industrial leaders can use sustainability to create value, click here.
