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Top ESG, Environmental Issues for Business 2022
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Top ESG, Environmental Issues for Business 2022

The 2021 year brought many notable developments in the world of environmental policy and law. These included the Biden administration’s policy shifts at beginning of the year, and COP26’s deliberations and diplomacy about climate change towards the end. Moreover, the public discourse has been more focused on environmental, social and governance (ESG) issues than ever before.

Let’s not forget about the Covid-19 pandemic that continues, adding another layer of complexity to everything. Looking back at 2021 can help us to anticipate the future.

Crowell & Moring’s recent research informs our analysis, as well as executive, legislative and judicial news from the U.S.A. and abroad. SurveyWe polled in-house counsel and sustainability professionals to find out how companies are managing ESG and environmental performance.

Surprisingly, only around two-thirds (32%) of in-house counsel stated that they were aware of environmental issues and understood their impact on their company’s future.

The only certainty in the rapidly changing landscape of ESG is that things will get more complicated. The following five developmentsencompassing litigation, regulation, policy, disclosures, and supply chainare by no means the sum total of the myriad environmental issues that demand attention, but they capture several important, emerging themes.

Litigation: Beware of the Greenwashing Monster

More than half of survey respondents said that their companies share information, such as information on environmental issues they are focused on, metrics from an ESG framework, environmental performance data and forward-looking goals and targets.

False advertising claims are also allowed Intensifying, with the plaintiffs bar bringing a never-ending stream of lawsuits claiming companies are engaging in greenwashingover-promising and under-performing regarding their environmental efforts.

These cases are being challenged by the use of new, sophisticated testing methods. They also challenge past assumptions and environmental performance standards. The Federal Trade Commission is poised to ReviewIt Green GuidesWe expect that 2022 will see companies being able to provide proof of what they have put out for public consumption for the first-time in a decade.

Regulation: Can the Government Keep 1.5 Alive?

COP26Many saw it as the last chance to secure firm, accountable emission reduction commitments that would limit global temperature rise to 1.5 C. However, it was disappointing for many who had watched countries struggle for decades with how to reconcile the moral imperative of economic growth in the Global South with the need to reduce greenhouse gas emissions.

And with the U.S. Supreme Court ConsiderThe extent to which the Environmental Protection Agency can regulate carbon dioxide emissions under Clean Air Act this spring is unknown. This could impact the U.S.’s ability to achieve all its goals.

However, there is hope for meaningful change as the Biden administration aims to reduce the deficit. methane HFCsGreenhouse gases that have a higher global warming potential than carbon dioxide are more potent greenhouse gases. According to the survey results less than half of companies monitor greenhouse gas emissions. This approach may need to be reassessed in light of events in the next year.

Policy: Environmental Justice Influences the Regulatory Agenda

Biden administration has been more deliberate than any administration before in recognising the immense impact environmental stressors have had on traditionally under-served areas. As such, the administration has VowIntegrating social justice and economic opportunity considerations into environmental permitting and enforcement.

Numerous companies indicated While most respondents indicated that they are aware of the impact of their operations on minority communities, fewer actually measure that impact. Companies may need to collect additional data in the next year in order to anticipate increased interest in local impacts of their operations, especially in areas with more concentrated commercial activity.

ESG Disclosures are Available Are Businesses Ready?

Voluntary disclosure systems under which companies have the option to disclose ESG metricsand, more recently, climate-related financial risks are not new. However, ESG and climate disclosures are becoming more mandatory. Both the European Union (EU) and the United Kingdom have taken significant steps over the past two years in order to require companies to disclose decision-use information.

While the U.S. is still playing catch-up, many anticipate that the Securities and Exchange Commission will soon issue a rule to require climate disclosures. The U.S. is also making use of its leverage. purchasing powerTo impose requirements on companies, regardless of their public-reporting status.

The majority of respondents to the survey indicated that they already disclose more information than the law requires. However, it remains to see if the amount and type of data will be sufficient to meet future requirements.

Supply Chain Sustainability Monitoring and Measuring

Recent events, including the Covid-19 pandemic have placed supply-chain issues in the public’s consciousness, along with the increased scrutiny that it inevitably brings. The majority of respondents to the survey identified environmental goals for their supply chain. However, many are having difficulties implementing these goals due to cost, difficulty tracking or unwilling suppliers.

Companies with international suppliers and operations might find these issues particularly challenging and may turn to AI-powered management tools for help. These tools will become more important than ever, as the disclosure requirements have been implemented.

Predictions for 2022 may be premature, as a new Covid-19 type of concern is emerging. These five environmental issues are important to keep in mind as businesses adapt to the changing times.

This column does not necessarily reflect The Bureau of National Affairs, Inc.’s opinion.

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Information for Authors

Thomas A. LorenzenCrowell & Morings Washington, D.C. office. He is also co-chair of the firm’s Environment & Natural Resources Group. He advises clients on a variety of climate, sustainability, compliance, and other issues. He was previously a Justice Department assistant Section Chief and oversaw the defense for all EPA rulesmakings.

Elizabeth B. DawsonCrowell & Morings Global ESG Advisory Team Leader, she brings her experience as a former DOJ Environment Defense Section trial lawyer to help clients with environmental performance concerns and counseling regarding emerging environmental issues.

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