Chuka Umunna warns companies of need to focus on environmental, social and governance issues

Chuka Umunna, the former Shadow business secretary, today declared it was vital that companies heed their environmental, social and governance responsibilities as reputational crises grip Nike and Boohoo.

Umunna, who this week announced he had been made head of ESG at corporate communications giant Edelman, said the backlash against Nike’s failure to have any black board members despite its support for Black Lives Matters and the controversy over conditions at a Boohoo fashion supplier in Leicester showed poor ESG was bad for profits and share prices.

“If you’ve got a poor ESG profile it inhibits your access to capital and your share price massively.”

He added: “But there is also a massive opportunity. There is around $30 trillion invested globally in sustainable ESG assets and that’s only going to grow. And there is an increasing weight of research that illustrates ESG conscious firms are outperforming the mainstream by some margin.”

He said it was vital ESG was seen as a profit driver, rather than merely philanthropic, activist or charitable activities such as those championed by the Corporate Social Responsibility movement.

“Before, ESG was seen as slightly wishy washy and associated with CSR. The people who would go into ESG roles would not be coming from the core parts of a business. They might come from the third sector or whatever. Now, though, you have major figures in finance taking up these roles from other big positions.”

He cited Marisa Drew, head of European, Middle East and Asian investment banking at Credit Suisse who has now moved to be head of “Impact” – jargon for ESG – and Richard Threlfall, who moved last month from his role as global head of infrastructure at KPMG to run its Impact arm.

Citibank has just put senior banker Keith Tuffley in charge of a new sustainability division.