by Oyut Amarjargal | December 19, 2024
The Bloomberg event highlighted pressing Environmental, Social and Governance (ESG) issues that will shape corporate performance and investment strategies in 2025. Below are five key takeaways:
1. AI Surge Intensifies Energy Demands
The rapid growth of generative AI has significantly increased energy consumption. Data centers that support AI workloads require immense power. Panelists highlighted the need for investors to consider this trend’s environmental and regulatory implications, especially in regions lacking renewable energy infrastructure.
2. Supply Chain Scrutiny Tightens
Governments and regulators are increasingly focused on supply chain transparency, particularly for compliance with ESG standards. Companies are adopting traceability solutions to manage risks associated with human rights violations, emissions, and resource usage within their supply chains. Experts emphasized that proactive engagement with suppliers and traceability solutions will be critical for mitigating financial and reputational risk (i.e., the European Union Regulation on Deforestation-Free Products).
3. Carbon Capture Moves to the Forefront
Carbon capture technologies are becoming a key strategy for meeting global emissions targets. Panelists noted that while adoption is growing, the success of these technologies depends on supportive policies, scalable infrastructure, and proving its financial viability to investors.
4. Sustainable Debt Faces New Risks
ESG-linked financial instruments like sustainability-linked bonds and loans face scrutiny over potential “greenwashing.” Panelists recommended thorough due diligence to assess the credibility of the sustainability claims associated with these financial products.
5. Nature-Based Solutions Gain Traction
Investments in biodiversity conservation, reforestation, and ecosystem services are gaining momentum due to increasing recognition of the financial and environmental benefits of preserving natural capital. Regulatory changes and investor interest are driving this shift.
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