The changing face of risk: why ESG matters in 2026

Health, safety and environmental regulation is evolving constantly. Risks change and diversify. Businesses cannot afford to ignore the consequences of non‑compliance or the risks of falling behind changes in legislation and regulatory expectations. There are clear opportunities, though, for organisations that excel in environmental, social and governance (‘ESG’) performance.

For those who find themselves on the wrong side of health, safety or environmental laws, there is undoubtedly an increased risk of prosecution. The Environment Agency’s National Waste Crime Survey 2025 highlights that waste crime, including mis‑description of waste on transfer or disposal, the use or operation of illegal waste sites, fly tipping and unlawful exports, remains a major enforcement priority.

Exceeding emission limits in environmental permits, failing to comply with monitoring requirements or otherwise breaching permit conditions also frequently leads to prosecution. Other high‑risk areas range from poor storage of fuels, solvents and other chemicals, inadequate spill response and water pollution to harming protected species and unlawful felling of trees. 

Environmental impacts have also continued to attract high levels of public scrutiny – particularly on the hot topics of water pollution and waste disposal. Any perceived leniency or lack of effective enforcement on the part of the regulator is met with vocal public criticism. It is perhaps unsurprising, then, that regulators are quick to publicise convictions and highlight the resulting sanctions.

There are clear opportunities, though, for organisations that excel in environmental, social and governance (‘ESG’) performance. Photograph: iStock
 
Employee health and wellbeing

Employee health and wellbeing have moved to the forefront of today’s most pressing ‘social’ considerations. according to HSE’s latest statistics, 964,000 workers suffer from work-related stress, depression or anxiety, and 40.1 million working days are lost due to work-related illness. Compliance around mitigating workplace stress is no longer optional; it is fundamental to an employer’s legal duty to protect psychological, as well as physical, health. 

Furthermore, the introduction of new standards and guidance, such as ISO 45003 – the first global standard providing practical guidance on managing psychological safety at work – and BS 30480:2025, which sets out formal guidance for suicide prevention, intervention and support in the workplace, are further signs that support this sea change and the shift in priority. Both are particularly important and relevant to the new ‘world of work’ post the Covid pandemic, and provide clear structures and frameworks for organisations on how to approach these areas. 

Crucially, this isn’t just a business level issue. For many health, safety or environmental offences that occur in a business setting, individuals may face personal criminal liability – particularly if they have any degree of management responsibility, whether for company compliance or for the operations or events that gave rise to an incident, or breach of the law.

In the event of conviction, we are seeing courts impose heavier sanctions (both fines and imprisonment) and a willingness to impose ancillary orders such as director disqualifications orders. 

Few sanctions carry as much weight as a confiscation order under the Proceeds of Crime Act, designed to strip away the financial gains of illegal activity. Environmental regulators, in particular, are increasingly pushing for such orders, intended to deprive offenders of financial benefits derived from criminal conduct.

In many cases, there will be a presumption that all credits into the offender’s accounts are tainted by criminal conduct and at risk of confiscation. In other words, confiscation is not necessarily restricted to income that is clearly and directly associated with the environmental incident in question and isn’t limited to profits. 

Emma Tattersdill

Beyond prosecution, regulators have many enforcement tools available to them. A site closure notice, for instance, or confiscation of a vehicle or equipment used in the commission of an offence, can stop a business in its tracks.

Over the last few years, we have also seen fixed or variable penalty notices (‘fines’ imposed as a civil rather than criminal sanction and therefore without an initial court hearing) extended to a greater variety of environmental offences and imposed for much greater amounts. 

While enforcement activity regarding wellbeing and workplace stress has historically lagged, that is changing. Two recent cases where a leading educational establishment and ambulance service both received HSE ‘Notices of Contraventions’ for failing to adequately manage work-related stress, attracted much publicity and attention. It again shows that we are starting to see a shift in focus, and the regulator is more confident and relatively quick to act against organisations who do not adequately manage this. 

All of these evolving risks, the adverse publicity associated with enforcement action and the practical consequences of a business or individual having a criminal or enforcement record, has driven health safety and environmental compliance to the top of corporate agendas. It is the stick that can drive effective use of ESG policies and procedures. 

Positive messaging around ESG

What of the carrot, though? Whereas, historically, discussions around ESG may have focussed on compliance issues alone, many businesses are now successfully reframing the conversation, promoting positive messages around social and environmental responsibility, accountability and transparency. 

Emma Evans

Businesses have increasingly recognised that customers’ buying choices are influenced by the ‘green’ credentials of products, services and supply chains. To draw on just one set of statistics in this area, respondents to a climate survey by the European Investment Bank Group identified climate change and environmental degradation among the UK’s top three challenges, sitting behind only the cost of living crisis.

66 per cent of respondents in the UK believed that their behaviour could make a difference in addressing climate change and consequently 58 per cent said they would pay more for climate friendly food, for example. This percentage was reported to hold good across all age ranges and income groups.

We also see environmental impact and environmental resilience taking a greater significance in tender scoring matrices, particularly for public procurement contracts, and much closer scrutiny not only of the supplier/contractor themselves but of all partners in their supply chain.

Perhaps less widely known is the extent to which environmental credentials now influence the attraction and retention of talent. The European Investment Bank Group climate survey reported that 61 per cent of respondents in the UK said the climate impact of a prospective employer is an important factor when job hunting. This figure rose to 73 per cent of UK respondents aged 20–29, with 19 per cent identifying it as a top priority.

ESG factors also consistently feature in decisions of lenders and investors. For lenders, environmental and, increasingly, climate change risks are widely recognised as affecting the value of properties or assets taken as security, or the lender’s ability to realise those assets in the event of default.

Lenders and investors alike are also taking into account the reputational issues associated with environmental and social performance. They will generally have little to no tolerance for environmental offending – and they may be attracted by strong environmental credentials. 

Workers and the public are equally concerned with how organisations approach health and safety, and want to know that they are working in an organisation who treats its people, and its health and safety systems and arrangements, with the utmost importance. It is not just about ‘speaking to the systems’ or ‘having the paperwork’ but are those systems really seen, felt, understood and known by everyone, and especially - led from the top of its senior management throughout the business? Is the culture of that business demonstrable, and reflective of a positive, forward-thinking and pro-active organisation? 

Benefit from positive ESG performance

So, while many businesses will need to consider their ESG credentials as part of their commercial and corporate reporting, what can businesses also be doing to ensure they can use ESG tools effectively, to avoid the pitfalls of regulatory non-compliance and to benefit from the positives in their environmental and social performance?

This question may be particularly relevant for any risk, EHS or SHEQ managers who are now finding ESG, or sustainability, newly falling more within their remit. ESG does not always have to mean re-inventing the wheel. It is about ensuring that the organisation has considered the right issues and can also demonstrate its approach to ESG, with certainty and confidence. 

Therefore, first and foremost, it is essential to identify what any ESG policies and practices are doing, or will do, for the business. 

• Do they identify environmental and social impacts across the whole business and throughout all procurement and supply chains? 
  
  
• Do they identify all areas of regulation that apply to the business and identify any gaps in compliance?
  
  
• Do they identify practical and achievable ways to reduce impacts, minimise risk and cure compliance gaps?
  
  
• Do they identify the unique social and environmental selling points of the business?

A crucial element of such an assessment is to ensure that policies and practices are tailored to the individual business. Unlike off-the-shelf products, bespoke processes will target the specific impacts or risks associated with the business’ activities and will identify practical, achievable ways to manage/minimise them. They are also far more likely to identify the businesses’ unique ‘green’ selling points, to shape green claims that can be justified under consumer law and advertising standards and provide the evidence to support those claims. 

Secondly, it is essential to ensure policies and procedures are up to date and implemented throughout the business.

For example:

• Are all teams including those ‘on the ground’ familiar with, and implementing, them and do they understand their relevance and importance? Are they familiar with reporting requirements and escalation procedures?
  
  
• Do any elements need to be updated to reflect changes in the business or business activities, or changes in the law?
  
  
• Do any elements need to be updated to reflect practical challenges or ‘lessons learned’ through the life of the policy/procedure?
  
  
• In our experience, engaging operational teams and the workforce in the initial development of the policies and practices that apply to them, and ensuring that they have a role in reviewing and updating them, significantly increases the likelihood of successful implementation.

It is also worth remembering that a regulator will often ask for a copy of any relevant policies and written procedures in the event of an investigation – or it may have copies already, particularly if they are published on the business’ website or required under a regulatory permit or licence.

It can be extremely difficult to justify to a regulator why a particular policy or procedure has not been put into practice, given that the business itself will have identified these measures as the necessary and appropriate standards for its operations. It can also play a key part of any organisation’s governance. 

Commercial opportunities due to strong ESG credentials

Finally, it can be valuable to reflect on how well commercial opportunities presented by strong ESG credentials are understood at board level and beyond. There is a growing recognition that ESG delivers real value when it is embedded into strategic decision‑making. 

Where businesses integrate ESG factors upfront, rather than simply measuring and reporting on performance after the event, they will often be better positioned to unlock opportunities associated with positive social and environmental outcomes: better business opportunities, easier investment, increased staff attraction and retention, an improving and effective culture, continued business longevity and success, as well as legal compliance and defensibility. Getting ESG right can show how a business is committed to its people, its community and its environment — and importantly, it takes its role as a responsible and sustainable leader seriously. 

For more information see:
bexleybeamont.com
Contact Emma Tattersdill and Emma Evans:
[email protected]
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Emma Tattersdill is Environmental partner at Bexley Beaumont law firm

Emma Evans is Regulatory (health & safety) partner at Bexley Beaumont law firm