Unlocking the Potential: Maximizing ESG Value in Your Company

Evaluating the Benefits from the ESG Value

There are a number of benefits that can be gained from evaluating the ESG value chain:

• Improved Risk Management:- Evaluating the ESG value chain can help organizations identify and manage risks related to environmental, social, and governance issues.
• Enhanced Corporate Reputation:- Organizations that are seen as leaders in sustainable finance can gain a competitive edge over those that are not.
• Increased Access to Capital:- Organizations that demonstrate strong ESG performance may have an easier time accessing capital from investors who prioritize sustainable finance.
• Greater Efficiency and Effectiveness:- Evaluating the ESG value chain can help organizations improve their efficiency and effectiveness by identifying action and ways to reduce environmental and social impacts.
• Increased Access to International Capital:– The sustainable finance space is becoming increasingly international in nature.

How to Evaluate ESG Value

There is no one-size-fits-all approach to evaluating ESG value. However, there are a few key steps that can help organizations quantify and communicate their sustainable finance value:

• Identify the Scope of Sustainable Finance:- Organizations should determine how they define sustainable finance and identify the specific environmental, social, and governance issues that they will consider.
• Quantify Environmental, Social, and Governance Impacts:- Organizations should quantify the environmental, social, and governance impact of their activities. This could involve using tools such as impact assessments or materiality assessments.
• Evaluate Management Systems:- Organizations should assess how well their management systems address environmental, social, and governance issues.
• Communicate Sustainable Finance Value:- Organizations should communicate their findings in a way that is easy for investors to understand. This could involve developing sustainability reports or ESG scorecards.

Why you should implement the ESG value in your company

1. Shareholders prefer sustainable companies. A recent survey revealed that 87% of shareholders agree or strongly agree that a company’s environmental, social, and governance policies are important considerations when deciding where to invest their money.

2. The Sustainable Development Goals call for action from the private sector

• • The United Nations launched a set of Sustainable Development Goals in 2015 as part of an effort to target economic inequality and climate change by 2030.
  • These goals place a huge focus on engagement from the private sector in order to achieve these objectives.

3. Transparency is key for investors

• • Investors want transparency about how investments affect ESG issues such as;
  • climate change
  • risks and opportunities
  • poverty alleviation, & inclusion,
  • human rights
  • deforestation
  • Tax evasion.

4. Competitiveness will suffer if organizations are not implementing sustainable finance. More than half (53%) of investors said they would cut back on investments in companies with no significant ESG policies or initiatives.

5. There is a growing trend towards sustainable investing

• • The amount of money invested by organizations committed to ESG-related causes has grown 65% since 2010, reaching $3 trillion globally in 2014.
  • This trend is expected to accelerate as more sectors begin to implement sustainable finance practices, such as the food & beverage industry.

6. Legislation is building momentum for responsible corporate behavior. In June 2015, the Obama administration unveiled several new policy proposals aimed at curbing climate change and reining in carbon dioxide emissions.

7. There is a push towards zero deforestation. In May 2015, a coalition of more than 30 corporations including Unilever, Nestle, and Mattel announced that they will no longer purchase products that contribute to deforestation.

8. The Principles for Responsible Investment are gaining momentum. In April 2014, an additional 309 investors representing $24 trillion in assets under management joined the PRI initiative, bringing the total number of signatories up to 715 representing $59 trillion in assets under management as of June 2015.

9. It’s what millennials want. A recent survey by Ernst & Young found that 79% of millennial investors around the world believe it is important for companies to have a positive impact on society and 71% want to work for a company that makes a positive contribution to society.

10. It’s good for your brand

• • In 2012, Cone Communications released results from an annual corporate reputation survey which showed that “green” was the number one reputation characteristic among consumers,
  • Beating out factors such as product quality and social responsibility – something that can be directly attributed to sustainable finance practices.

11. Businesses are coming together. In 2010, the UN Principles for Responsible Investment (UNPRI) initiative saw signatories representing $45 trillion in assets under management promise to engage with portfolio companies’ management teams on environmental, social, and governance (ESG) issues.

12. Sustainability is becoming a competitive advantage. In a 2014 survey of 1,000 investors by the asset management firm Schroders, 78% of respondents said they saw sustainability as a potential source of competitive advantage for their investments.

13. You can make a difference. Through sustainable finance practices, businesses can help to achieve the United Nations’ Sustainable Development Goals which call for action in areas such as climate change, economic inequality, and human rights.