Why every public company should run an ESG assessment

In today’s corporate landscape, Environmental, Social, and Governance (ESG) considerations are no longer optional. Investors, regulators, customers, and employees increasingly demand that companies demonstrate their commitment to sustainability and ethical governance. Conducting an ESG assessment—a thorough evaluation of a company’s policies, practices, and performance in these areas—is essential for public companies to stay competitive, mitigate risks, and unlock value. 

Here’s why every public company should prioritize ESG assessments.

1. The majority of large companies are impacted by regulatory requirements

Governments and regulatory bodies worldwide are implementing stricter ESG reporting standards. In the European Union, for example, the Corporate Sustainability Reporting Directive (CSRD) mandates detailed ESG disclosures for thousands of companies. Similarly, many countries are adopting the IFRS ISSB standards to require corporate action. 

2. Aligning with Investor and Market Expectations

Investors are placing growing importance on ESG factors when deciding where to put their capital. An ESG Assessment can ensure companies are aware of how they are performing versus the wider market. One of the first areas to consider is how a companies ESG ratings compares to peers overall. The most popular ESG rating agencies to consider are: MSCI, ISS, Sustainalytics and CDP. 

3. Buyer expectations on ESG performance

It is increasingly common for buyers of company products to require a certain level of ESG performance. This is often due to Value Chain reporting requirements from within the CSRD requirements. Two of the most common supply chain performance assessment tools include Ecovadis and Sedex. 

4. Educate internal stakeholders

Performing an annual ESG assessment can be an effective tool to communicate overall performance to internal stakeholders. As ESG is a rapidly changing industry it has increasing importance to make sure decision makers across an organisation understand a companies current progress on ESG> 

5. Start your assessment by considering materiality

When running your ESG assessment, always start by considering the financial materiality impact for your organisation. For example, if you a software company, consider thinking about your ESG strength for 

Example ESG Assessment Checklist for Public Companies: 

Step 1: Governance and Overview

• Who has responsibility for ESG?
• Are we impacted by new regulation? 
• How do our ratings compare to our sector / peers? 

Step 2: What do our stakeholders care about? 

• What are our investors asking of us? 
• What are our buyers asking of us? 
• What are our customers asking of us? 

Step 3: How do we compare on key issues? 

• Are we sufficiently strong on our commercial relevant material topics? 
• How does our disclosure compare to competitors? 
• Are we monitoring emerging ESG trends?

ESG assessment is a strategic imperative for every public company. From managing risks and meeting regulatory requirements to attracting investors and fostering stakeholder trust, ESG assessments lay the foundation for sustainable growth. In a world increasingly focused on accountability and impact, public companies that prioritize ESG are positioning themselves for success today and in the future.

Nossa Data is proud to support listed companies on all aspects of their ESG disclosure. Please get in touch if you would like to learn more.