Capital costs for businesses that do not take ESG – environmental, social and governance – factors into account are rising, according to Ali Cambray, director, ESG and net zero, at PwC Channel Islands.
Speaking at a breakfast seminar organised by the Institute of Directors Guernsey, she also highlighted a ‘tidal wave’ of climate-related regulation – including around company reporting and disclosures – as well as pressure for change from investor groups and consumers.
Asked by the Guernsey Press if companies were ‘doomed’ if they failed to act, she pointed to what former Bank of England governor Mark Carney had said on the subject.
‘Mark Carney says companies that do not do this will go bankrupt. Absolutely, yes, long-term,’ she said.
‘They’re not going to be relevant and ultimately that will lead to bankruptcy. Absolutely there are winners and losers from this.’
She added that companies which did not act would lose out on opportunities in the transition to a green economy or it would be business failure due to not adapting to the climate risk and the physical effects of what that would mean. ‘Whichever way the policy goes, it’s about relevance,’ she said.
At the seminar, held at the Old Government House hotel, she also highlighted other factors that companies needed to consider. ‘Why bother thinking about ESG issues as a business? It really reflects wider trends around a shift from shareholder to stakeholder capitalism, regulatory pressure, investor pressure, consumer pressure and just good business sense.
‘There’s been a tidal wave of regulation at EU level, at the UK level and indeed even in Guernsey here, where you’ve now introduced measures to encourage climate disclosure.
‘This is a really fast-paced regulatory agenda – and it’s really important for business to stay ahead of that and think strategically around it.’
There were also trends around finance ‘around the increasing cost of capital for businesses that aren’t taking ESG factors into account and a lower cost of capital – a really interesting innovative array of low-carbon financing for those that are taking action’.