A survey published by international law firm Mayer Brown has revealed a widespread lack of preparedness and short-termism among financial services leaders on net zero. Although nearly three-quarters of business leaders said companies must embrace ESG initiatives if they are to maintain relevance in the future, only 18% of financial institutions and 27% of investment firms currently have a net-zero transformation strategy that extends beyond the next 12 months. “A move away from short-termism has been at the core of the ESG movement,” said Tim Baines, Partner at Mayer Brown. “On the one hand, there is pressure for businesses to focus on short-term financial returns and profit maximisation. On the other, there is a growing recognition of the importance of adopting a longer-term perspective that considers social and environmental factors.” This balancing act is making it difficult for businesses to be able to implement their long-term environmental and net-zero strategies, Baines added. The study identified transition-related costs as another significant obstacle to business transformation, with respondents highlighting their concerns about prolonged funding and expensive net-zero plans. “We continue to see more innovative and imaginative forms of financing for the transition to net zero,” said Peter Pears, Partner at Mayer Brown. “As sustainable finance has grown, it has matured – companies and their advisers are often looking to ‘push the envelope’ in terms of sustainability-related structures and sources of capital to access the funding they need. Transition finance […] is something we are seeing more and more of.”
