It is the time of year for lists and reviews of the year. Whilst climate change came back on the agenda in 2014 thanks to the US and China deciding to play ball, here are five ESG risks that will become increasingly important in 2015:
1. The Transformational Power of the Internet of Transparency
Smart phones are transforming the way that people interact. Internet is now available 24-7. The Spring Revolution was supported by social media such as Twitter. In 2014 China began a corruption crackdown. The conclusion of China experts is that whilst there is a political element behind the crackdown, there is also a realisation in the upper echelons of the Communist Party that they are unable to stop online chatter about the corruption of local officials.
The transformational power of the digital revolution is not about creating the Internet of Things but about the Internet of Transparency.
2. Wall Street’s Cell Phone Litigation Problem
Wall Street execs were the first to use cell phones. They have used them the longest and the most intensively. They were the first to upgrade to more powerful units. It is perhaps not surprising therefore that it is Wall Street firms that are the ‘canary in the mine’ in terms of litigation around the health impacts of long term cell phone use.
3. The Uncomfortable Truth about Taxation and Investment
Governments will consider reforms to corporate taxation because they have to. They simply cannot afford to lose revenue from their budgets at a time when their fiscal position is so tight – and will only become tighter as the looming demographic bills for health and pensions become due.
It is not a question of whether governments will act, but how. Already in 2014 we have seen governments act. We will see more in 2015 and company taxation practices will increasingly come under the spotlight.
4. Inequality on the Rise
In 2014 Thomas Piketty launched Capital in the Twenty First Century. Labeled the most important economics book since Friedman, Piketty has brought inequality back as a mainstream topic. But the reason is because there is a reality that is biting. We are seeing the issue feed through into minimum wage campaigns in the US and UK and can expect more in 2015.
Why Fast Food Strikes in US will not go away – and what McDonalds needs to do about it
5. Asbestos: The Forgotten ESG Risk That Just Won’t Go Away
The global asbestos trade is worth around $500 million, with India importing $235 million. The use of asbestos, particularly across Asia, continues to rise. Its main use is in construction for industrial use, but it is increasingly being used as a low cost ingredient in cement for residential housing. Investors will not just be exposed to future litigation. Asbestos is a classic universal case study, where the impacts of asbestos related diseases will impact the whole of society through increased health costs and reduced economic productivity.
Have a great holiday season. See you back in 2015.