Reporting & ESG

Amid the debate on what companies should or shouldn’t be doing on ESG, some things remain crystal clear: understanding and addressing business externalities is essential, and issues that affect the bottom line cannot be ignored. Deforestation is one of these. Investors and IR professionals are concerned about climate change, and increasingly about nature loss. More than 1,000 companies and 700 financial institutions have set net-zero targets, and many have signed up to become ‘nature positive’ and tackle their biodiversity impacts and dependencies. Deforestation is the biggest issue sitting at the heart of all this. Net-zero targets and nature-positive ambitions cannot…

In 2021, three quarters of IR Magazine cover stories focused on ESG. We looked at how companies were increasingly tying executive compensation to ESG, explored the ways in which ESG was being integrated into sell-side research and examined how ESG was shaping corporate reporting. Of course, IR Magazine has long covered ESG issues – just as the themes that fall under this umbrella have long been covered by IR professionals. In 2011, Neil Stewart talked about ‘the great sustainability race’. A decade ago, Tim Human wrote that investors were ‘turning up the heat’ on climate change. ESG became a topic…

Blue-chip companies spend big bucks on social programs. Apple, for example, recently increased its budget for its diversity program alone from $100 mn to $200 mn, while Mercedes Group spent €97 mn ($104 mn) on training in 2023, up from €93 mn the year before. The areas normally included under the S pillar of ESG are quite broad and people-oriented, but can be divided into company internal and external projects. Internal Cyber-security Diversity Ethics Health & safety Human rights Innovation Recruiting Supply chains Training: sales, technical External Communities Customers Marketing, communications Products R&D But while all of these areas have some…

Recently, the head of ESG at a blue-chip asset manager that is paying more than $200,000 annually for ESG data told me: ‘Once we get this ton of data from a major data provider, our work just begins. We have to make some financial sense of it.’ His remark points to a fundamental problem with ESG data and the $50 tn ESG investment market: there are too many indicators and too much non-actionable data. For an investor, knowing how many tons of greenhouse gases a company emits annually says little, if anything, about its performance, for example. In a recent…

In the dynamic landscape of financial decision-making, the importance of non-financial objectives – encapsulated in ESG criteria – has become central for governments, corporations and investors. Even as recent forecasts project a significant increase in ESG-related assets under management, concerns about the potential impact on returns persist. That has significant implications for IR professionals, who must guide their investors and reshape dialogues with various stakeholders. A paradigm shift in capital allocation The monumental growth in ESG-related assets underscores the paradigm shift in financial priorities. PwC forecasts that ESG-related assets under management will increase from $18.4 tn in 2021 to $33.9…