Recent high profile statements and reports (e.g. from the American Business Roundtable and the British Academy) have highlighted calls for redefining the "purpose" of business – the concept that business should not only return profit to shareholders, but in doing so solve the problems of people and planet - and not profit from harm. As the predictions below reveal, there appears to be a real momentum for change, driven by a number of factors which include, but are not limited to, more reporting and regulation.
ESG and Purpose – general
"With the growing trend for investors, consumers and employees to buy into companies that deliver positive social change alongside financial returns, the trend for business to adopt impactful social missions and have a clearly defined purpose looks set to continue - see Profit with a purpose – the new norm." – Corporate Partner Nadim Meer
"In the latter half of the year, companies' annual reports will start to reveal how they have embraced new corporate governance reporting requirements including: their mechanisms for engaging with employees and other stakeholders; and how they have taken into account factors including reputation and the environment in delivering corporate success – see our Corporate governance reporting checker.
From January, the FCA's revised UK Stewardship Code will place environmental, social and governance (ESG) factors and climate change at the heart of effective stewardship, increasing the likelihood of asset owner and manager engagement with companies and their reporting on these issues." – Corporate Legal Director Kate Higgins
Environmental and Green Finance
"With the UN Climate Change Summit, COP26, due to be held in Glasgow in November, the Government's Environment Bill will enshrine in law environmental principles and targets, including meeting net-zero carbon by 2050 and on biodiversity, air quality, water, resource and waste efficiency. It will establish a new environment regulator, the Office of Environmental Protection." – Mishcon Private Managing Associate Alex Rhodes
"Businesses will need to navigate carefully consumers' - and regulators' - rising expectations for sustainably and ethically produced goods and services without alienating consumers over price. The ASA will more actively regulate 'green' adverts and we expect more Government initiatives to encourage 'green' behaviour." – Commercial/Data Protection Associate Emily Dorotheou
"Following the Government's 2019 Green Finance Strategy, with the collaboration and contribution of key regulators and industry bodies, the public and private sectors will increasingly drive integration of climate and environmental factors into the UK's financial system and accelerate the flow of finance into green and low carbon technologies, services and infrastructure. We also expect more so-called 'green' financial products (or 'money with purpose') such as 'green' loans and other products linked to sustainability goals (sometimes at a lower rate of interest if criteria are met)." – Real Estate Finance Legal Director Sarah Spurling
"The practical application of the Green Loan Principles and the Sustainability Linked Loan Principles - each jointly developed by the LMA, APLMA and LSTA - will rapidly evolve. The challenge will be to develop more subjective criteria for those areas which are not readily verified or assessed by an independent third party in order to create meaningful benchmarks and avoid any challenge of 'greenwashing'." – Real Estate Finance Partner Omega Poole
"Expect measures to increase the minimum energy rating for commercial buildings from grade E to grade B by 2030 (see further here). Although seemingly a long-term target, it is pretty punchy and likely to need improvements to be planned sooner rather than later. We also anticipate a new focus on how buildings are used in practice, not just how they are designed in theory." – Planning and Environment Legal Director Daniel Farrand
"Climate litigation will become a dominant theme as all sorts of stakeholders, from consumers to businesses in the supply chain, seek redress for damages seen to be caused by climate change, be that claims against "polluting" companies or governments. This ties in to a growth generally in collective redress claims, across environmental, data, mis-selling and healthcare, with issues such as opioid abuse claims likely to rise to the fore." – Dispute Resolution Partner Richard Leedham
Social and Employment
"Gender pay gap reporting is in its third reporting cycle and, although mandatory reporting of other types of diversity data - including the much talked about proposals for ethnicity pay gap reporting - may be some way off, more employers will start to analyse and track their diversity data and take steps to address any disparity." – Employment Partner Jennifer Millins
"Issues around #MeToo and sexual harassment in the workplace are unlikely to abate and the rise in workplace investigations, coupled with the holding to account of those responsible for harassment, is set to continue." – Employment Legal Director Asa Waring
"It would be surprising if the new Government did not take up the Select Committee's proposals to increase employers' obligations to protect workers from harassment. We anticipate that new limits on the use of NDAs in employment, announced in the last Parliament, will be introduced (see here)." – Employment Associate Matt Robinson
"Although the Government's pledge in the Queen’s Speech to increase protection of workers’ rights consists mainly of proposals that were already in the pipeline, employers will need to be alert to potential developments in 2020, including around flexible working and maternity and redundancy rights." – Employment Legal Director Asa Waring
"The Government's forthcoming response to its recent Modern Slavery Act and supply chains consultation will likely require businesses to investigate the risk of modern slavery within their supply chains more rigorously and to comply with increased reporting requirements, with tougher penalties if they fail to comply." – Commercial Associate Fran Denny
"Following inquiries into corporate collapses, the Government plans to strengthen the powers of the Small Business Commissioner to support small businesses that are exploited by their larger partners through late payment practices." – Corporate Legal Director Kate Higgins