In light of the 2021 UN Climate Change Conference of the Parties (COP26), the role of the private sector in climate action is becoming increasingly apparent with commitments made by companies to climate change action accelerating in 2022.

In its latest report, ‘Tech, Media, & Telecom (TMT) Predictions 2022 – Thematic Research’, leading data and analytics company GlobalData predicts that political pressure to regulate big tech will rise and environmental, social and governance (ESG) disclosures will be required from all companies going forward.

Rachel Foster Jones, Analyst on the Thematic Team at GlobalData, shares her views on ESG in 2022:

ESG disclosures will be required for all companies

“COP26 reignited the climate debate and showed that the private and public sector have an equal responsibility to take climate action by making financial decisions that take climate change into account. Banks and regulators are playing their part by ensuring that ESG is factored into all investment decisions, especially since the Sustainable Finance Disclosure Regulation has now come into effect in the EU.

“Companies can no longer avoid disclosing ESG as it will become an expectation in 2022. Those failing to disclose their ESG will risk a backlash from their shareholders. Fortunately, the creation of the International Sustainability Standards Board will provide clarity for ESG reporting.”

Commitments to SBTi and the Climate Pledge will accelerate

“Companies know that making meaningful climate action pledges wins stakeholder approval. The Science Based Target initiative (SBTi), which provides companies with a clear pathway to reduce their emissions in line with the Paris Agreement goals, is becoming increasingly popular with participation in SBTi set for rapid growth. However, companies must commit to achieving the targets that they set – which the SBTi will hold them accountable for – in order to demonstrate that they are taking climate action seriously.

“Amazon’s Climate Pledge to reach net-zero by 2040 through voluntary carbon offset schemes is gaining interest in the private sector. However, the carbon offset market will need to be tightly regulated and administered to ensure that pledges made, and achievements claimed, are credible to avoid accusations of ‘greenwashing’ and the consequent reputational damage.”

Political pressure to regulate big tech will rise

“Arguably, big tech has been given a free rein for too long with accusations persisting that social media facilitates fake news, misinformation, and online abuse. After a Meta whistle-blower revealed details of social media’s impact on users’ mental health, public trust in big tech is at an all-time low.

“As the harmful impacts of social media become increasingly apparent self-regulation will no longer seem credible and there will be a growing pressure on regulators to take action and crack down on the tech giants. One example of this is the revised UK Online Safety Bill, which will bring more social media regulation through the introduction of new offenses and fines which other countries may well follow in 2022.”