At the start of the new year companies are in full swing when it comes to preparing their annual reports to provide stakeholders with information on how their strategy is enabling the overall company objectives. Since non-financial information has become mandatory for many under the EU-directive, the reporting of ESG data is now serious business. Companies that are implementing sustainability in their core business are increasingly eager to harvest its positive impact. Here is where ESG benchmarks come in. They provide the opportunity to compare a company’s sustainability with its industry peers, highlighting improvement potential, offering best practices and demonstrating leadership.  

Top 4 of DJSI’s highlighted development

Topics included in last year’s recordings were the ones where RobecoSAM applied major updates in the methodology in comparison with the previous assessments. A few of the 2018 highlights are the following:  

1. Impact Measurement & Valuation: the 2017 DJSI assessment showed that the majority of companies were struggling with quantifying their social and environmental impact. Therefor this criterion was included in the 2018 questionnaire as optional and not scored. The outcomes of this voluntary assessment showed that 50% of companies provided an answer in line with RobecoSAM’s expectations. Since the participation rate was low, RobecoSAM decided to keep this criterion as voluntary and to not include it in the 2019 scoring.  
2. Tax Strategy: Transparency is key when it comes to tax, requiring companies to be publicly transparent about their tax practices and policies. Additionally, companies are expected to disclose their effective tax rate and an explanation if it deviated from the industry benchmark.  
3. Climate Strategy: Since the Paris Agreement taking action on climate change became relevant for all companies and has been included in the questionnaire of all industries in 2018, aligned with the updates made by CDP to their 2018 Climate Change questionnaire. Companies are asked to provide information on how climate change targets are included in management incentives and whether the company makes use of sensitivity analysis and carbon pricing.  
4. Corporate Governance: Similarly to tax, transparency is key when it comes to corporate governance. In the new methodology, companies are required to provide more information about their ownership structure and how voting rights are distributed among shareholders. Furthermore, the requirements in terms of public disclosure have increased expecting companies to be fully transparent in terms of its corporate governance practices.  

Benchmarks as drivers to accelerate your sustainability program

Finch & Beak helps companies to avoid the reporting trap by focusing on issues that are key for your company and society, by choosing the right benchmarks, and through efficient ways of reporting. With over 15 years of experience in Dow Jones Sustainability Index support and a long-term collaboration with RobecoSAM, Finch & Beak is one of Europe’s leading experts in assisting companies with their submission to ESG benchmarks. Our work for (ex-) industry group leaders is characterized by a pragmatic, 12 month-approach that leverages existing assets in the short term, while identifying opportunities for strategic development in the future.  

On the 7th of March 2019, we are hosting a DJSI Expert Training in Amsterdam in collaboration with RobecoSAM with guest speakers from frontrunners ING and METRO. This training presents an excellent opportunity for efficient executive education on DJSI.

If your organization is looking to improve its sustainability performance, please download our service description or contact us at hello@finchandbeak.com for more information.

^{Image source: Alex Zebley, Flickr}