Climate

Change

Risk

$4 trillion of assets will be at risk because of climate change by 2030.

1.5 degrees Celsius is the threshold for dangerous global warming. Former U.S. Treasury Secretary Henry Paulson describes climate change as "the single biggest risk that exists to the economy today".

Opportunity

$53 billion worth of savings identified by companies responding to the CDP climate change program. Research shows that those that reduce their carbon intensity the most, outperform the market.

Water

Risk

Companies reported up to $425 billion combined business value at risk due to water insecurity. World Bank predicts a growth rate decline of 6% of GDP by 2050 as competition for water intensifies.

Opportunity

Growing number of investors and customers expect companies to grow and to adapt. To remain competitive companies must learn to do more with less.

Risk

15% of global carbon emissions result from deforestation and forest degradation. $30 billion in potential losses due to the impacts of deforestation were reported by companies undertaking assessments. 30% of companies reported physical forest-related risks in their supply chain.

Opportunity

60% of companies have recognized forest-related opportunities with the potential for substantive strategic or financial benefits. US$26.8 billion worth of potential business opportunities were reported by just 20% of responding companies.

Forests

Racial Diversity

Risk

Diverse companies enjoy 2.3 times more cash flow per employee.

Opportunity

Diverse management boosts revenue by 19% compared to their less diverse counterparts.

Gender Diversity 

Risk

Females make up 51% of the US population but less than 47.2 % of the workforce. Men are twice as likely to be hired than women, regardless of the hiring manager’s gender. Companies in the bottom quartile for gender diversity were 29% less likely to achieve above-average profitability than were all other companies.

Opportunity

Companies in the top-quartile for gender diversity on executive teams were 21% more likely to outperform their national industry median on EBIT

margin and 27% on EP margin

Risk

Average cost of a data breach was $4.24 million in 2021. In 2021, digital economy firms faced 270 cyberattacks on average and the damage of cyber crime is expected to be more than $6 trillion.

Opportunity

89% of company executives said that improving their cybersecurity would enhance customer loyalty and trust. A strong cybersecurity strategy also sets the foundation for a business to offer additional services and expand into other markets.

Cyber Security

Class Action

Law Suits

Risk

25% of the companies in the United States faced at least one class action claim in 2020. 116 monetary settlements of securities class action suits in the United States valued at a total of $3.51 billion in 2021.

Opportunity

Projected corporate spend to defend a class action suit is $3.3 billion in 2021. Improved corporate governance lets companies save money and might also improve their profitability.

Regulatory Penalties

Risk

Companies in the U.S. paid in excess of $1.8 billion in sanctions in 2021 for violating anti-money laundering, bribery, and privacy regulations.

Opportunity

If a company has good management, then the company's brand is less likely to be tarnished. A good reputation can help customers trust that the business cares about them and their interests.

Risk

In HI 2021, 94 new shareholder activism campaigns were initiated. The US led the way with 51 different initiatives, higher than the same period in 2020. Investors also showed solidarity in support of ESG-reIated proposals; 14% passed during this time frame - more than triple the average 3-year rate which sits around 6%.

Opportunity

A company's performance and its broader impact are intrinsically linked, according to Chris James the founder of Engine No. 1, an investment firm purpose-built to create long-term value by driving positive impact through active ownership. In the long run, companies that invest in their stakeholders are stronger. This creates a win for both shareholders and stakeholders as they gain from this investment, making them better off over time!

Shareholder Activism