The release last week of the United Nations Intergovernmental Panel on Climate Change’s sixth climate assessment report ignited the already combustible and quickly spreading wildfire that is ESG.

Few have actually read the much quoted Summary for Policymakers and of course even fewer have read the more than 1,300 page complete report, but nearly every c-suite executive and corporate director knows the denouement of the report that the earth is warmer than it’s been in 125,000 years (.. that is a wild factoid for your dinner table) and that society’s dependence on fossil fuels is driving that warming.

Axios reported on two focus groups after the report’s release, that included 13 participants from key swing states, who when asked “if they had read or seen the IPCC report” only 2 out of 13 swing state participants in the panels answered that they had.

And beyond describing how the IPCC conclusions were failing to resonate with swing state voters (.. likely key if the federal government is going to respond), Axios also described a broader failure to register even on social media where the response to dire IPCC report was muted, at best, when compared to the earlier 2018 IPCC report. Internet stories posted within 3 days of the report’s release generated 985,000 social media interactions (likes, comments, shares, etc.) versus 1.76 million after the 2018 report.

But drilling down on likely reactions to the climate report is fascinating. A Pew Research Center survey in May found just 10% of Republican and Republican leaning independents in swing states were deeply concerned with addressing climate change, while a majority thought President Joe Biden’s ambitious plans to curb climate change would hurt the economy.

So the intrigue here is that we know the typical chief executive officer is a 52 year old White male who is a registered Republican; someone who may not be deeply concerned about addressing climate change.

But in a study cited when the SEC Approves Nasdaq’s Race and Gender Board Disclosure Rules, two weeks ago, more than 80% of public companies are reporting some (.. but, maybe not enough) ESG data.

In a Faustian bargain, whether or not CEOs are personally concerned that climate change will have a material financial impact on their business, and despite that we have assisted public companies with that analysis, annually, for more than a decade to satisfy disclosure requirements under federal securities laws (i.e., almost always determining there was “no” material financial impact), now CEOs know they must report on significantly more and additional ESG data.

It is not lost among many c-suite executives and boards of directors that the idea ESG began in 2004 with a UN initiative to influence capital in non-Western markets; that is, the same UN whose IPCC is now fanning the flames. Also of note, while we have been engaged in sustainability law for more than a decade, most of that was environmental, the “E” in ESG, where now we are increasingly being asked for policies and reportable metrics for social and governance.

In a survey that received much media attention completed in December 2020, just more than half of executives at public companies described that they had only organized a formal ESG program (.. that went beyond mandatory disclosure requirements) within the prior 12 months.

Today, the legal and political institutions in the United States and the EU are demanding ESG ideas be implemented by businesses posthaste. That same December 2020 survey found more than 74% of businesses, including private non-public companies with 500 or more employees, expect to report on ESG by the end of 2022. Nearly all of those responding affirmatively identified as the reasons both “impending new federal ESG disclosure laws” and current “public expectations for the culture of a business they want to be associated with.”

Moreover, investors as well as employees, vendors, suppliers, and a host of other stakeholders are looking for companies to, now, create and implement sustainable policies and practices that respond to environmental social and governance matters.  Whereas in the past there might have been a single print story seen by Wall Street Journal subscribers in a day, today, there is viral social media that can attack a company with millions of views in hours if not minutes. So, the pace of all of this is all but explosive.

Businesses are being pulled into or have, increasingly voluntarily dived into the risk and opportunity that is ESG. Our portfolio of law and non-law services can provide companies with assurance that their environmental, social and governance challenges are being best addressed by mitigating risks and taking advantage of opportunities.