Governments and Regulators
Governments’ adoption and implementation of ESG issues are becoming an important ingredient in decision-making and policy implementation.
Governments and regulatory bodies may promote ESG in their jurisdictions by enacting legislation around ESG disclosure, ESG practice, or sustainable finance strategies as a way to establish a system that allows and incentivizes the movement of capital towards sustainable finance. Not only companies and financial institutions are being requested to report their climate-related risk on a mandatory rather than voluntary basis, but rules-based standards for responsible and sustainable investment funds are starting to appear in different jurisdictions.
Governments may also adopt ESG goals within their operations and service, including procurement, and incorporate ESG factors into decisions on government assets and liabilities.
Increasingly, ESG is a point of differentiation that affects competitiveness both for jurisdictions and the companies that operate within them. Supporting strong and consistent ESG reporting, raising the bar for performance, communicating success to different stakeholder audiences, and providing clarity for investors could help governments by building their brand and their investment attractiveness.
Yet, governments and regulatory agencies may sometimes show a limited understanding of how ESG aligns or intersects with government efforts and obligations to protect people and the environment. They may also hesitate on how to take a role in regulating ESG disclosure, performance, or ratings, or on how they could capitalize on investors’ interest in ESG to attract capital to their region.
Comprehensive services for governments and regulators
ESG standards for regulators
We support regulatory bodies establishing ESG standards, benchmarks, thresholds or targets that can be used to objectively identify what constitutes adequate, good or exceptional performance by companies or funds in the sustainability area. They need to be realistic and achievable to not inadvertently reduce the competitiveness of companies and funds operating in the jurisdiction. We have significant experience on establishing guidelines on what qualifies as an ESG fund. Given our global operations, we are also particularly well positioned to identify regulatory synergies across jurisdictions and anticipate legal trends.
ESG policies for governments
One of the fundamental roles of government is to enact policy that protect the safety and wellbeing of people and the environment. We advise public authorities on the enactment of new policies, or improving existing ones, in relation to the development of a sustainable economy ecosystem that provides a safe space for companies, financial institutions, regulators and other stakeholders to enhance their performance in tandem with sustainability objectives.
ESG strategies for investment-attraction agencies
Multinational companies are increasingly making ESG-influenced decisions in order to respond to their shareholders, customers and corporate boards. We advise on the implementation of policies that attract the investors that wish to bolster the sustainability of their business operations. As ESG is a tool to help investors evaluate financial investment risk and opportunity, investment-attraction agencies need to provide clarity to increase investor confidence and attract further investment. For companies looking to relocate, a jurisdiction with strong ESG performance may be attractive because it lends credibility to the ESG claims of the companies that are based there.
