The link between non-financial performance and long-term organizational health and profitability continues to become clearer. BlackRock Chairman Larry Fink clearly put it once more in his annual letter to CEOs, saying that “to prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” But with many benchmarks around, what are the ESG Essentials for a company?
Investors are increasingly looking for frontrunner companies that report transparently on material risks, but also on how these companies leverage opportunities in order to ensure and enhance long-term economic returns. Simple and relevant ESG information that they can trust and understand seems to be the single most effective recipe.
A clear and up-to-date materiality matrix that is translated to business risks and opportunities can be a tremendous help in the process. Focused application of reporting frameworks such as GRI Standards or SASB can certainly help to provide information and KPIs that investors and other stakeholders can use to make organizations’ progress comparable.
On the other hand, investor ratings and benchmarks like Dow Jones Sustainability Index and CDP emerged to find answers to specific standardized questions, and identify best-in-class performers. Despite increasing efforts for alignment, for instance through the connections between CDP and DJSI’s Climate Strategy chapter, the scattering of ESG ratings landscape can turn the answering of requests into a full-time job.
It’s worth noting that ratings are still voluntary – there’s no legal requirement to participate to any of them. But how to determine which are the most relevant rankings in order to make an informed decision about allocating resources and making an effort to participate? The next four elements may help you to choose your battles wisely:
Balancing richness and reach can help to select the most relevant ESG ratings that align with your objectives. Download our cheatsheet and start today to make your reporting calendar for 2019 more focused.
Don’t remain stuck in the reporting trap. If reporting and benchmarking is increasingly restraining your calendar, our ESG Essentials service can help you create more focus and get more value out of your ESG Benchmarking efforts. Please contact Josée van der Hoek, Director, at josee@finchandbeak.com or +31 6 28 02 18 80 to find out how Finch & Beak can help you deliver more impact with less effort.
Multidisciplinary advisor in ESG benchmarking, sustainability strategy development and execution. | nikkie@finchandbeak.com
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