Finance Monthly - December 2021

Other sub-sectors have been impacted differently, with industrial and logistics sites seeing spikes in demand thanks to the growing use of online retail and home deliveries as people were forced to spend more time in their own properties. The ESG imperative Towards the end of the year, COP26 took centre-stage in November, as world leaders gathered in Glasgow to discuss the changes and commitments that need to be made to achieve net-zero goals and turn the tide in the fight against climate change. The pandemic also helped to thrust ESG considerations into the spotlight, as the impact of an unprecedented global crisis was felt acutely in all corners of the world. The role of corporates in driving the ESG agenda is vital. With governments, regulators, customers, employees, lenders, insurers and investors increasingly judging companies based on their ESG commitments, these themes are working their way onto the transactional agenda, too. Just under two-thirds of respondents to a recent Trowers & Hamlins research survey identified ESG as either a significant dealmaking factor or an important factor ‘to a certain extent’, as pressure mounts for due diligence into potential acquisition targets to go deeper than ever before when analysing ESG issues. Large financial institutions from banks to insurers are factoring ESG risks into their pricing decisions, so an ability to demonstrate ESG credentials in those areas is becoming more and more important. With the direction of travel clear for all to see, savvy leaders will already be looking to get ahead of the curve on this to save themselves potential exposure later down the line. Alison Chivers, corporate partner at Trowers explains: “ ESG is an opportunity to set yourself apart from your competitors. If you’re not doing it, you risk finding it harder to get investment, financing or insurance. If you are taking the lead, you can expect to see the benefits .” As we enter 2022, the embedding of recent and new regulation and guidance will only heighten the need for organisations across all sectors to get their ESG houses in order – this will cover a range of risk areas from working conditions, gender pay and executive remuneration reporting through to climate and sustainability policies. As data and disclosure in these areas become more sophisticated, potential transactions may be scuppered if the ESG numbers do not add up. This in particular is one strong trend from 2021 which we are expecting to become even more deeply ingrained in the minds of dealmaking decision-makers through 2022. Finance Monthly. Bus i ne s s & Economy 23