This year, ERM is marking its 50th anniversary. Over the decades, we have had to respond to many changes, including some significant global shocks, and this has helped us to build the resilience we needed to navigate the recent health, social and economic impacts associated with the global pandemic.
The impact of the pandemic remains with us and will do so for the foreseeable future – the devastating impacts should act as a stark reminder to us all of the fragility of human life and the planet. With this backdrop, we are seeing what I believe is a tipping point in business; corporations are making bold leadership commitments on net-zero, diversity and inclusion, and biodiversity. In this Decade of Action, these commitments are essential if the ravages of COVID-19 are not to re-emerge as the consequence of a failure to act in response to the climate emergency, inequality and nature loss.
ERM was actively involved in the Vision 2050 project Time to Transform convened by the World Business Council for Sustainable Development (WBCSD). It presents the unique, but rapidly closing, window of opportunity for action in the decade ahead and calls for reinvention, resilience and regeneration. Through my role as Co-Vice Chair of the WBCSD, I am working alongside the CEOs of 200 committed companies to take a leadership position in the transformation required. For ERM this means contributing to transformation through the work we do for our clients and by ensuring minimal impact from our own direct activities.
In pursuit of our purpose of shaping a sustainable future with the world’s leading organizations, we draw on more than 50 years of environmental, health, safety, risk and social experience helping clients to define goals and translate them into action. We call this capability our “boots to boardroom” approach, one that allows ERM to develop strategic and technical solutions that advance objectives on the ground or at the executive level. This report outlines our impact through our work with clients by setting out the key influences we believe are driving business decision-making and action.
The transition to a low carbon economy is accelerating due to recent and strengthened commitments from governments, companies, investors and wider society. This is impacting all areas of our clients’ business, which requires technical and commercial solutions tailored for different sectors, geographies and value chains. From net-zero strategies to utilizing new energies to retiring old energy-intensive assets – we are helping our clients turn promises into action.
Companies are seeing the cost of capital becoming intrinsically linked to a business’ sustainability performance and disclosures. We are also seeing investors recognizing the need to integrate environmental, social and governance (ESG) factors into all aspects of assessing and managing risk and opportunity. We are working for corporates and investors to set ambition, policies and targets then translate these into actionable programs and portfolios while disclosing their performance to stakeholders in a robust, consistent and meaningful way.
Through responding to these external pressures while navigating socio-economic uncertainty, our clients are building resilience which we see as the ability to balance the demands of meeting today’s operating environment, while investing for the future. In a report we co-authored through our new SustainAbility Institute by ERM with the WBCSD, we identified the elements of resilience required to help companies thrive over the longer-term, whilst navigating the impacts of COVID-19.
In October 2020, in the midst of the pandemic, we established the SustainAbility Institute by ERM as our primary platform for thought leadership on sustainability. We identified a need to define, accelerate and scale sustainability performance by developing actionable insights for business. The positive reaction to the Institute’s work thus far confirms this need as we collaborate with industry leaders to offer trusted, objective and well-rounded perspectives informed by experience.
Living our values
In parallel with advising clients on sustainability matters, we are also managing our own response. We have committed to net-zero across our operations by 2025 and will strengthen our Science Based Targets to align to a 1.5 degree Celsius target. We remain committed to a strong program to contribute to the Sustainable Development Goals through our client work, operations and broader collaborations. We delivered our Standing Together program through the ERM Foundation to support our long-term nonprofit partners as they responded to the impacts of the pandemic on their organizations.
Although we are making good progress in meeting our annual sustainability targets and long-term goals, we continue to strengthen our focus on those areas where we have not fully met our targets or where we want to aim higher: increasing diversity, equity, equality and inclusion in our workforce, improving employee well-being and training, and quantifying the sustainability impacts of our work with clients.
We are proud to be a Global Reporting Initiative (GRI) Standards Pioneer. This Sustainability Report 2021 serves as our Communication on Progress, an annual disclosure to stakeholders on progress made in implementing the Ten Principles of the UN Global Compact in the areas of human rights, labor, environment and anti-corruption.
As highlighted in this Sustainability Report, we strongly support the Sustainable Development Goals, the Task Force for Climate-related Financial Disclosure (TCFD), Principles for Responsible Investment (PRI), Women’s Empowerment Principles and other internationally recognized standards and initiatives. This year, we are publishing our first TCFD Disclosure, in line with the recommendations of the TCFD Task Force.
Over the past year, my team and I have strengthened our engagement with internal and external stakeholders on issues that are important to them, and we expanded our advisory panel of independent thought leaders for their assessment of our materiality process and this report. This feedback informs our focus on the issues facing our world and our clients, which allows us to prioritize activities within our business strategy.
In May 2021, we announced that KKR, a leading global investment firm, has signed an agreement to acquire a majority position in ERM. The transaction is subject to approval by shareholders, a scheme of arrangement to be sanctioned by the UK courts and various regulatory consents. As part of KKR’s proposed investment, ERM Partners would continue to be shareholders in the business. KKR’s proposed investment is being made through its Core Investments strategy, which represents capital targeting longer-term opportunities. This proposed long-term partnership with KKR will allow us to expand and accelerate our client impact, and bring new capabilities and technologies to the business of sustainability. The transaction is expected to close in the third quarter of 2021, subject to the aforementioned conditions being satisfied.
On behalf of the Executive Committee, I extend my thanks to our clients for placing their trust in ERM and allowing us to support them to build sustainable businesses. I also extend my thanks to our employees for sharing their stories, insights and photography for this report - as a result of their efforts, our report was recognized as a top reporter for the second consecutive year in the WBCSD Reporting Matters process.
In particular, we recognize the considerable contributions of more than 200 voluntary members of our Sustainability Network who help drive action across the company – adapting to the remote working situation we have found ourselves in. The people of ERM deliver on our purpose of shaping a sustainable future with the world’s leading organizations every day through the services we provide to our clients, the projects we support through the ERM Foundation and the way we operate our business. I am humbled by their talent and grateful for their commitment to our business.
Group Chief Executive