A European Green Deal anticipates that all member states will have circular economies by
2050, resulting in net-zero emissions. Although the European Union (EU) has a lead
over the United States, the United States has also developed bold plans to decarbonize its
economy and aim for a net-zero emission target by 2050.
Due to the implementation of regulations pertaining to sustainability, such as carbon taxes,
and the integration of environmental, social, and governance rules into financial criteria,
companies are already experiencing the financial consequences of failing to act on
sustainability. To avoid poor lending conditions and exclusion from capital markets,
stakeholders must demonstrate that they have developed robust sustainability and
environmental management strategies.
Additionally, the private equity market incorporates sustainability and ESG criteria into its
portfolio strategies. Investments in companies with an ESG strategy that is robust and
convincing can enhance returns and reduce lending and revenue risks.
In order to manage investment risks, investors increasingly consider ESG issues. The ESG
performance ratings and reports offer investors a comprehensive view of how a company
minimizes risks and generates sustainable long-term financial returns.
In addition, firms that have successfully implemented sustainability and environmental, social,
and governance (ESG) strategies tend to outperform other top global companies