The U.S. Securities and Exchange Commission voted to finalize new rules that will require companies listed on financial exchanges in the U.S. to disclose certain climate-related risks for the first time. The rules, which have been highly anticipated for several years now, are being touted as “watered down” compared to earlier draft rules, including because the finalized version does away with all Scope 3 emissions reporting requirements (even for large companies). As we dove into here, the rules are, nonetheless, expected to bring some transparency to how companies and their boards are thinking about and acting on climate-related risks.
Against this background and the shifting state of broader environmental, social, and governance (“ESG”)-related reporting and initiatives, including voluntary efforts by companies across industries that are looking to cater to eco-conscious consumers, investors, etc., it is worth considering the role that these things play when it comes to the success – and the valuation – of fashion, apparel, and/or luxury brands. A couple of recent reports shed some light on this …
> Brand Finance found that “even for individual businesses, there could be billions of dollars of financial value to be gained from enhanced action and associated communication” on the ESG front.
> Research from Wharton’s Serguei Netessine suggests that when companies prioritize material ESG factors in their earnings calls, it positively influences their overall value.
