Over the last few years Environmental, Social and Governance [ESG] screened investment has become mainstream. Major institutional investors from Blackrock and State Street to the Norweigian Pension Fund have publicly announced their commitment to assessing E, S and G data alongside information about financial performance. In January 2020 Blackrock CEO, Larry Fink, wrote a letter stating that we are experiencing a ‘Fundamental Reshaping of Finance.’ He said:
“We believe that all investors, along with regulators, insurers, and the public, need a clearer picture of how companies are managing sustainability-related questions. This data should extend beyond climate to questions around how each company serves its full set of stakeholders, such as the diversity of its workforce, the sustainability of its supply chain, or how well it protects its customers’ data.”
What is ESG?
Environmental (E): Covers themes such as climate risks, natural resources scarcity, pollution and waste, and environmental opportunities
Social (S): Includes labour issues and product liability, risks such as data security, and stakeholder opposition
Governance (G): Encompasses items relating to corporate governance and behaviour such as board quality and effectiveness
Significant industry changes mean that strong ESG practices have become a must-have rather than a nice-to-have for corporations to attract investors' dollars. Investors are increasingly taking a magnifying glass to everything from environmental impact and employee health to cybersecurity and supply chains. This scrutiny is only expected to intensify especially in the wake of Covid-19 and the George Floyd protests. Many companies are underprepared, both in terms of managing this data but also because of outdated processes and understaffed teams.
Companies cannot manage the incoming ESG information requests from investors, regulators, stock exchanges and other stakeholders.
Companies will receive dozens if not hundreds of questionnaires from investors / ratings agencies about ESG issues. Some of these questionnaires will come with very short turnaround times.
Alphabet soup of terminology / frameworks. It is very difficult to manage / know what to report. Plus there is more regulation coming in via the EU Non-Financial Reporting (NFRD) Requirements and the Green Taxonomy.
Pressure to report and deliver on ESG problems is relevant to a lot of stakeholders: Investors, Regulators, Stock Exchanges, Communities, Employees, Clients.
We are revolutionising how companies manage and report on ESG information. Via processing unstructured data, we auto-populate reports, highlight financially material issues, and provide peer comparison across multiple ESG frameworks. This allows us to reduce compliance costs and cost of capital.
Leveraging ESG market advancements and deep domain expertise, our solution supports reporting aligned to: ESG regulatory requirements, ESG stock exchange listing requirements and the following ESG reporting frameworks:
Longer term we intend to integrate additional ESG frameworks including but not limited to:
We are currently working with companies to pilot test our solution. Reach out to [email protected] to learn more.