ESG environmental factors made simple

Access to capital now depends on climate readiness. Lenders and insurers scrutinise physical risk exposure, infrastructure resilience, and transition plans. High-risk assets—from thawing permafrost in Alaska to flood-prone industrial sites—struggle to secure credit without credible ESG evidence.

Supply chains and costs fluctuate with every climate shock. McKinsey and PwC track billions in potential delays, redesigns, and logistics inflation as extreme weather accelerates. Boards can no longer treat environmental risk as distant from operational resilience.

Policy mandates are arriving faster than expected. The UK Treasury requires large companies to disclose net-zero transition plans by 2024, while the EU’s CSRD enforces double materiality reporting. High-emission sectors go first, but SMEs will follow quickly.

Europe prioritises sustainable capital. The EU taxonomy and CSRD push investors toward low-carbon portfolios and force detailed climate disclosures.

The UK treats climate as core economics. The Stern Review guides fiscal and investment policies, requiring boards and CFOs to factor climate risk into every calculation.

The United States is setting a 2050 north star. Federal agencies pursue a net-zero goal even as regulations vary by state—meaning enterprises that wait will be caught off guard when federal guidance lands.

• Climate change & decarbonisation. Transition plans, renewable procurement, and science-based targets.
• Biodiversity & land use. Deforestation controls, habitat protection, and nature-positive investment.
• Water, waste, and pollution. Scarcity, wastewater treatment, circularity, and plastics reduction.
• Air quality & emissions. Scope 1–3 greenhouse gases, particulates, and local air pollution.
• Resource stewardship. Diminishing raw materials, responsible sourcing, and recycling.

Many teams bucket these into greenhouse gases, water use, waste and pollution, plus land use and biodiversity so reporting stays repeatable.

Double materiality. Reporting on how environmental issues impact the business and how the business impacts people and planet.

Transition risk. Policy, market, and technology shifts that change asset values or cost structures on the path to net zero.

Inclusion in net-zero coalitions. Alliances such as GFANZ and Race to Zero that commit financial institutions and corporates to measurable climate targets.