Surging trend in Sustainable Finance & ESG Investment

With the growing need for impact-making investments and aligning it with ESG goals, changes in sustainable finance and investment are driving a need for more and better ESG data across investors. In 2020, global sustainable debt issuance reached $700 billion in 2020, almost doubling compared to 2019.

The past few years have seen a big paradigm shift in how investors view the power of sustainability performance: 98% of investors use ESG rating agencies as part of investment decision/valuation criteria. Companies are increasingly applying ESG screening to their Sustainable Investment strategies and reporting that incorporating sustainability into the finance function has significant financial benefits. In 2020 ESG aligned funds and mutual funds incorporating ESG criteria posted higher returns than their benchmarks.

Continuous evolution of the CSA

An annual evaluation of companies’ sustainability practices, the CSA was established in 1999 and has evolved drastically over the last 20 years. It is widely considered the gold standard of ESG assessments because of its extensive coverage and ability to predict trends and in 2022 11,000+ companies will be assessed. CSA-derived scores are used for the composition of the Dow Jones Sustainability Index (DJSI), S&P 500 ESG Index, and several other S&P Dow Jones sustainability indices.

The content of the CSA is reviewed and improved annually, through engagement with CSA participants, thought-leaders, industry experts, investors, and researchers. In 2022 S&P Global has made 10 criteria updates: these are applicable to different industries. The most important changes are applicable in the environmental dimension, with updates in among others Environmental Policy & Management Systems, Operational Eco-Efficiency, and Climate Strategy. Finch & Beak will publish a summary article about the CSA 2022 methodology changes next week, click here to sign up and receive updates.

Activating your 2022 CSA approach: start with the material issues for your company

Finch & Beak’s Nikkie Vinke started with the need for a solid sustainability strategy built on materiality as a foundation for the company’s ESG performance. As quoted from Edoardo Gai: “Do not delegate the intelligence of your sustainability program to the Corporate Sustainability Assessment.” Using examples from Finch & Beak’s recent ESG Survey and Nestlé’s Net Zero Roadmap, the need for stakeholder engagement in value chain sustainability was illustrated.

Nikkie also shared five expert tips for setting up for a successful CSA 2022 from Finch & Beak’s previous Towards a Lean DJSI 2022 Process webinar, coming directly from three companies in various stages of their DJSI journey:

• Start with the strategy, not with the reporting
• Formalize good governance practices, including responsibilities and ownership
• Focus the work and commit to what you are focused on. Rather do some things really well, then none of them properly
• Engage your colleagues - mainly HR - for an optimal cooperation
• Map, consolidate and disclose data across relevant ESG frameworks & standards

Ready to activate your company's 2022 CSA approach?

With over 15 years of experience in ESG Benchmarking support including DJSI, Finch & Beak is one of Europe’s leading experts in improving our clients’ sustainability programs and ESG performance.

The Finch & Beak company vision is to accelerate sustainability. Our ESG and sustainability strategy work is characterized by a continuous improvement method that leverages existing assets in the short term while identifying opportunities for strategic development in the future.

If your organization is looking to accelerate its sustainability performance, please download our service description or contact Johana Schlotter, at johana@finchandbeak.com or call  +31 6 28 02 18 80

^{Photo by Sonia Sanmartin on Unsplash}