Global Lessons and Strategies for ESG Compliance

Global enforcement actions and regulatory developments in environmental, social, and governance (ESG) offer valuable lessons for investors and managers. By examining the key themes emerging from these actions, firms can better align their practices with expectations, avoid pitfalls, and enhance the credibility of their ESG strategies.

The shift felt around the world

ESG is transforming worldwide as regulators, investors, and industry initiatives push for greater transparency and accountability. Regulators are moving toward mandatory reporting and stricter scrutiny to combat greenwashing.

Frameworks like the Task Force on Climate-Related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB), along with initiatives like the ESG Data Convergence Initiative, are standardizing metrics and improving the accessibility of ESG data across industries. Investor demand is also driving change, with institutional and global investors seeking deeper insights into ESG integration, methodologies, and impact measurement.

This shift is driven by both regulatory changes and evolving investor expectations, reshaping how firms must approach ESG practices.

Key themes from ESG enforcement actions

2024’s enforcement actions and regulatory reviews across global markets have highlighted recurring challenges in ESG practices. These include:

• Divergent regulatory expectations: ESG priorities differ across regions, with some jurisdictions emphasizing climate risks (e.g., carbon emissions) while others incorporate broader social and governance considerations. Firms must adapt to these varying requirements to ensure compliance.
• Inconsistent ESG integration: Claims of comprehensive ESG adoption often lack consistency in execution across teams or regions. Embedding ESG principles organization-wide is crucial for credibility.
• Data quality and transparency gaps: Differences in data availability, especially between developed and emerging markets, can hinder reliable ESG reporting. Transparent methodologies and disclosure practices are essential to bridge these gaps.
• Lack of standardization: Fragmented ESG frameworks make it challenging to compare performance globally. Aligning practices with recognized standards is critical to demonstrating compliance.

These themes underscore the importance of aligning ESG claims with practices and ensuring they are supported by robust processes and documentation.

Strengthening ESG compliance

To address these challenges, firms should focus on the following priorities: 

• Substantiating ESG claims with credible data and documentation.
• Enhancing transparency by clearly communicating methodologies and data sources.
• Implementing robust monitoring systems for ongoing oversight and accountability.
• Leveraging frameworks and expertise to align practices with global standards and investor expectations.

Adopt a proactive approach

As ESG investing continues to grow, regulatory scrutiny will only intensify. Firms that adopt a proactive, globally aligned approach to compliance will be better equipped to adapt to changing standards and maintain investor confidence.

By learning from global enforcement trends and addressing these challenges proactively, firms can create a sustainable and transparent investment ecosystem that supports long-term success for all stakeholders.

How we help

Our dedicated ESG advisory and analytics practice helps firms of all sizes develop and monitor ESG programs to mitigate risk, make informed choices, grow profitably and sustainably, and combat greenwashing in the process.

Our ESG data & analytics solution, Ethos ESG, ACA’s new ESG platform helps our clients understand and design metrics programs according to client/investor preferences, track those metrics and report on progress over time, and advise staff on compliance around evolving ESG regulations.

Contact us to learn how we can help you with your ESG needs, grow your investments, and protect your firm.

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