Global Insights Report:
The Rise of ESG Regulations
Get an overview of ESG-related risks and
how they can impact your business
Regulators are taking a tougher stance on ESG disclosure.
In the last three years alone Environmental, Social and Governance (ESG)-related regulations - grew by more than 100 percent across the UK, US and Canada, indicating that ESG regulatory landscape is evolving fast. And this trend looks set to continue.
The Global Insights Report analyzed the evolution of ESG regulations from 2013 to 2018, finding that:
- In the last three years, ESG regulations grew by 158% in the UK, and by 145% in the US and Canada.
- The most regulated topics are business ethics and climate change in financial services, energy use and consumer rights in the US utilities, and product and service safety in healthcare and pharmaceuticals.
- For some sectors, such as utilities and healthcare and pharmaceuticals, the majority of sector-specific regulations published after 2015 are mandatory.
- Financial Services sector specific regulations have almost doubled in the past three years in the US and UK.
- 18 of 20 sector specific regulations in the US utilities are mandatory and 8 of 9 are mandatory in the UK. Social and environmental topics have become more prominent in these recent regulations.
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What can you expect to see in this report?
Failure to manage ESG risks can lead to financial losses.
Datamaran’s Global Insights Report analyzes international and regional mandatory regulations and voluntary initiatives that have been published between 2012 and 2018.
The sharp rise in ESG regulations together with a tougher hand from policymakers send a strong signal to business that ESG issues require mainstream attention.
“Non-financial risks can have an impact on the long-term viability of organizations. Whether they like it or not, non-financial risks have to be mainstream and to be part of the enterprise risk management process.”
Paul Sobel, Chairman at the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and Vice President and Chief Risk Officer at Georgia-Pacific LLC.
Frequently asked question (FAQs)
Click on each question to learn more.
What does ESG mean?
Environmental, social and governance (ESG) issues, otherwise known as sustainability or non-financial risks, virtually define the idea of emerging risks. They’re often hard to identify and even harder to manage under current processes, many of which are inadequate.
ESG risks can have very concrete financial consequences. There is a growing expectation for companies to provide assurance of non-financial information, with investors increasingly asking for greater disclosure. There is also increasing evidence that companies who perform better on ESG disclosures also perform better financially.
What is the scope of this research?
The Global Insights Report uses data from Datamaran’s Observe module that tracks global regulations and voluntary initiatives around ESG. The report uses data retrieved on October 2018, which tracked 4800+ regulations from eight sectors and 200+ countries. The report focuses on a subset of those regulations, including 439 regulations and initiatives that apply to the financial services, healthcare and pharmaceutical, and utilities sectors in Canada, the US, and the UK.
The scope of the research includes regulations that apply to the local economy (national) and the greater economy (international). For the purposes of making data more useful for companies, the report splits the regulations and initiatives on a sector-specific and cross-sector or general basis.
What do “topic” and “emphasis” mean?
A topic is a theme within an ESG category. Currently, Datamaran tracks 100 topics which are clustered in the core categories of ESG, such as climate change, business ethics and human rights. Topics are Datamaran's unit of analysis to annotate and assess the ESG issues mentioned in a selected document from a selected source.
High, medium, low and no mention are the scores that are used to assess the level of emphasis each company puts on a specific topic in their corporate reports. The emphasis takes into account variables such as the number of times the topic is mentioned in a sentence (also the number of sentences mentioning it) and its location (e.g. CEO letter).
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