Lancaster University - Transforming Tomorrow

13 A Pentland Centre Research & Impact Digest, 2023 ESG and Sustainability Business and biodiversity ESG (environmental, social and governance) are three letters used by the corporate and investment community to describe sustainability concerns. ESG and sustainability are similar ideas, but also differ from each other because they view ‘materiality’ differently. In short, materiality is all about the importance or significance of an issue and there are two sources of materiality. Inside-out describes how companies and organisations impact society and the environment. This may result in corporate sustainability programmes on responsible sourcing addressing human/labour rights and the environmental impacts of supply chains, and also how company action might make a positive impact, say, by undertaking regenerative agriculture or being a living wage employer. This is a sustainability focus. An outside-in focus is the basis of ESG. Here the question is how, for example, climate change will impact the company and its total financial value. Investors need this information to assess the value of the company, and to understand a company’s sustainability response. This understanding guides investment decisions. If you address both perspectives, you are thinking about double materiality. If you consider how these two perspectives interact, you are thinking about dynamic materiality. Read a blog on these issues by Professor Jan Bebbington and Duncan Pollard on the Pentland Centre website. The Pentland Centre is developing a stream of research and engagement focused on how business can support global aspirations to arrest the loss of biodiversity. The Convention on Biological Diversity provides the global governance context in which countries address their biodiversity challenges. At the same time, business (including the financial system) is formulating its contributions to addressing biodiversity impacts. Centre work in this area is under development, and includes: n Describing the nature of the challenges that arise for business-biodiversity connections (see our blog) n Documenting reporting practices for a sample of companies who depend upon and impact biodiversity (see our blog) n In partnership with We Value Nature, we contributed thinking around how to guard against perverse outcomes from ‘natural capital’ thinking (see our blog) Our work in this area will continue over the next few years, as a variety of new business focused tools and assessments are under development. This includes the World Benchmarking Alliance’s nature benchmark as well as guidance on communicating nature risk to financial markets via the TaskForce on Nature Related Disclosure ( If you are interested in learning more about this work email Professor Jan Bebbington,