- Integrate Current ESG Into Your Business Strategy
Macroeconomic trends are what investors are looking for when they want to understand how companies are functioning, and this involves identifying ESG trends and risks, allowing them to position themselves for success. Although this is true, only about three companies in 10 throughout Europe are listed on files regarding climate-related impacts and environmental aspects of any business model.
Significant attention needs to be placed on how ESG factors could be compromising your business, and this information can help those companies integrate strategies that will be helpful. Although this trend of getting to ESG issues is lagging, it tends to revolve around sustainability reports and corporate responsibility issues.
- Identify Your Specific Material Topics
ESG issues really do need to be addressed more seriously by companies that are not tracking how they fit into the picture. There are stakeholders that are wide-ranging, and many ESG topics that companies cannot address equally. Focusing on strategies and topics revolving around ESG should be part of the material that you are disclosing. As investors, as well as stakeholders, all of this information is valuable when looking to the future.
If you have not been conducting assessments regularly, you should not be referred to the how-to guide that is provided on materiality which is where practical tips are presented on how to do what is called a materiality investment.
- Understand Your Current ESG Ratings
Both institutional investigators, as well as private companies, are regularly assessing ESG ratings that can help them make informed decisions. About 65% of investors are looking at these records on a regular basis, and businesses with high ESG ratings tend to get more of an investment, plus a reduction in the total cost of capital being used.
Don’t Miss: 12 Must-Have Features for an Ecommerce Website
It’s essential for any business to improve its ESG ratings every single year. We are recommending that ESG rating strategies be presented, specifically in reports that your company should produce weekly which will allow you to identify opportunities, and also gaps in your business structure, in relation to granular scores. By doing this, you can improve communication regarding what matters most to your investors that is tied to ESG scoring.
- Align With Global & Regulatory Frameworks
There was a 92% increase between the years 2001 and 2019 regarding voluntary and mandatory ESG disclosure frameworks. As a global consensus, reporting standards still need to improve, but these frameworks are often cited by investors as follows.
They are looking at our frameworks and global standards because of the key role that they play in making sure that investors have reliable information that is consistent and provides them with comparisons. Many of these businesses are following these frameworks to develop more useful ESG strategies, whereas others are simply using this information to shape the proverbial narrative into a format that stakeholders and investors will appreciate.
- Strive For The Best ‘Investment Grade’ Data
Every investor would like to have accurate and concise ESG information that is easy to understand. For example, the London Stock Exchange was able to identify characteristics that were investment grade based upon the data that was provided when compiling ESG data. These include:
Balance: providing an objective in regard to both good and bad information
Accuracy: the deploying of rigorous data collection systems
Comparability and consistency: using consistent global standards to facilitate comparisons
Boundaries: aligning the fiscal year with business ownership models
Timeliness: providing data that is going to coincide perfectly with the annual reporting cycle
Data provision: raw data must be provided along with regular data
External assurance: consider having all of the data assured
