Environmental, social, and governance (ESG) factors have become key considerations in the private sector when investors and companies are evaluating, disclosing, and mitigating risk. In the public sector, local governments face similar risks and many of the same ESG criteria are used by bond rating agencies to evaluate municipal credit ratings.
As our environment and communities continue to react and adapt to conditions in real-time, ESG factors are increasingly being used in decision-making. This has been increasingly evident in light of COVID-19, as the need to balance services and revenues place added pressure on the prioritization of projects and programs.
What is ESG?
The term ESG—environmental, social, and governance—describes factors that characterize sustainable, responsible, and ethical investments. ESG drives the way organizations, whether public or private, manage their risks while building resilience.
- Environmental: Consideration of an organization’s impacts on the environment through its operations and decisions
- Social: Consideration of an organization’s interactions and relationships with its workforce, customers, supply chain, and community
- Governance: Consideration of an organization’s policies, programs, and processes that dictate operations and decisions that ultimately affect business health and impacts on environmental and social resources
The topic of ESG has received increased attention as the need for equitable and resilient climate action has taken center stage. Investors and asset managers factor ESG considerations into their decision-making process. But ESG isn’t just a private industry concern.
ESG and Local Government
The same risks that affect businesses also affect the nearly 20,000 incorporated cities, towns, and villages across the US, as well as cities around the globe. Consideration of ESG factors is not just a buzz word; it makes fiscal and common sense.
- Environmental impacts of new development/infrastructure
- Social engagement with workforce/communities on public health and innovation
- Governance dictating decision-making and resource allocation
Climate Risk Mitigation and Action Plans address key sectors such as infrastructure, disaster risk management, finance, food security, natural environment, and water. As of December 2019, nearly 500 US Mayors “have committed to adopt, honor, and uphold Paris Climate Agreement goals.” The call to implement and adjust to more ESG-focused programs and policies is clear and growing stronger. For instance, the City of Chicago has taken a leadership role in integrating ESG considerations into its investment decision-making.
Just as investors need to consider ESG for long-term prosperity, municipal bond raters are also using ESG factors in evaluating a city’s credit rating, indicating that ESG factors will play an increasing role in local governance and decision-making. Understanding the nuts and bolts of ESG and how it can influence municipal financing, is the subject of this upcoming webinar.
Join us to learn more!
Join Climate Action KC (CAKC), ADEC Innovations, and Moody’s for an interactive webinar to learn about ESG for local governments—including what key ESG factors and risks are used by bond raters, and what you can do within your community to better manage these risks.
We will be diving deeper into ESG in the context of private investing, its relation to local governments, and climate resiliency in the era of COVID-19. There will also be a highly relevant discussion on the bond rating system and ESG led by Moody’s.
Topic Resilient Cities: Adaptation and Municipal Financing in the Era of COVID-19
Date May 28, 2020
Time 1:00PM PT / 3:00PM CT
Watch the on-demand webinar HERE.
FirstCarbon Solutions (FCS), an ADEC Organization, offers a full complement of efficient, practical, and cost-effective services to assess and manage the environmental impact of new and modified projects. Contact us for a free consultation to find out how we can help.