ESG
Capturing Value from ESG & Benchmarking
The demand for public non-financial information on environmental, social, and governance issues is both maturing and booming. Companies often elect to participate in ESG Ratings to showcase their sustainability efforts to their investors and other stakeholders and to improve their performance.
The Art of Non-Financial Reporting “Less is More”
The magnitude of different non-financial reporting frameworks increasingly pressures sustainability departments in staying away from the reporting trap and focusing on improving their positive impact. Companies must frequently cope with limited bandwidth in terms of attention and resources. Instead of the all-too-common machine gun approach of spraying efforts large and thin, it is important to select a limited number of high-impact sustainability efforts. Effective implementation requires precision in the definition of sustainability targets and dedicated efforts in execution.
StratESGy Unplugged
Analysts are better able to assess fundamental risk and reflect it in stock prices when corporate disclosures are specific and avoid vague, abstract language. However, according to SASB’s State of Disclosure Report, companies used vague and non-specific language more than 50% of the time across ESG topics. Sustainability leaders such as DSM, Unilever and Barry Callebaut demonstrate that a focused materiality approach that is strongly allied to the company’s Enterprise Risk Management and aligned with its business strategy leads to better results, both for society and for shareholders. With only an approximated 30% of companies actually combining their materiality assessment with their Enterprise Risk Mapping, “StratESGy”, i.e. the alignment of business strategy with ESG factors, is still in its infancy.
Paint is Not Transparent
Coating companies seem to underleverage their ESG performance in comparison to their peers from the chemical sector. And with more than a quarter of assets under management across the globe now invested according to ESG principles, listed companies within both sectors are well advised to increase their sustainability performance. What lessons can be learned from comparing to similar but also different sectors in different ESG Benchmarks?
ESG Results: Turning Data into Action
More than ever, companies are asked by stakeholders to share their performance on a variety of ESG related topics. Whereas in the past companies were good to go with a story-telling approach, today a data-driven approach is needed to fulfill stakeholders’ expectations in the best possible way. As the field of ESG information is immensely broad, ranging from detailed information on governance practices, to energy reduction activities, and health and safety initiatives, companies are advised to focus on what matters most to their type of business and organizational culture.
ESG Essentials: Focused and Lean Reporting
Spurred by regulation and industry standards, more companies than ever are reporting on core ESG topics by publishing integrated or separate corporate sustainability reports. Simultaneously, roughly one third of global assets under management are managed under an ESG strategy. While investors are becoming stronger advocates for ESG disclosure, companies are struggling to strike the balance between efforts and results. Focused and lean reporting combined with efficient responding to relevant external ESG rating requests can help to resolve this dilemma.
How Investors See Culture and Purpose as Keys to Profit
As over a quarter of assets under management across the globe are now being invested according to ESG principles, companies are well advised to maximize their ESG performance. However, straight-forward short-term improvement interventions will fall flat when your company is lacking a culture of sustainability that advances performance over the long-term. Investors are understanding this more and more, and are looking to understand what your company is doing to foster and cultivate a corporate culture that is aligned with the company’s strategy and purpose.
Embark on Your DJSI 2019 Journey with Confidence
On the 7th of March 2019, Finch & Beak organized another successful edition of the DJSI Expert Training in collaboration with RobecoSAM. Global practitioners and experts on ESG benchmarking had the opportunity to meet and exchange knowledge with top-level DJSI peers. We have summarized key insights from that day.
