ESG Investments Consultants: What Business and Fund Managers Should Know
The world of investing has taken a dramatic change as people shift their focus to targeting not just the profits, but also their impacts on the planet. They are checking for granular information that is helping them to pinpoint and sieve out bonds, stocks, and other investment instruments that do not focus on sustainability or responsible operations.
One of these areas of focusers is sustainability, especially climate change and social impacts.
As a company manager, business, leader, or fund manager, you have to embrace sustainability to reach a higher environmental, social, and governance (ESG) score and attract more investors and support from financial stakeholders. This is why you need to work with the best ESG investment consultants.
Read through this post for more insights into corporate ESG investments, including the steps that you can take to make your portfolio or investment instruments more attractive.
What is ESG Investing?
This is a type of sustainable investing that prioritizes environmental, social and governance (ESG) factors/ outcomes for improved sustainability rating. It is a way of selecting investment options that are designed to promote the well-being of the planet, companies, people and economy.
ESG investing is anchored on the realization that the performance of ESG impact of any company, no matter the industry, location or services offered, is impacted by social and environmental factors.
Recent years have seen a boom in sustainable or ESG investing, with more people demanding to see the rating of the instrument and asset they are targeting to be able to make the right decisions. When COVID-19 struck in 2020, many investors turned to ESG funds to grow resiliency.
This trend is now being anchored in law, with capital markets like HKEX and SGX demanding that listed companies publish regular corporate sustainability reports.
The idea is to ensure that every business is responsible for its operations. By extensions, clients who buy their financial assets also help to address the challenges facing the planet.
This is why managers of funds or financial instruments insist on following investors’ preferred areas of focus to get higher ESG ratings. This focus is being focused on by capital markets to ensure that people targeting investments make the targeted impacts on the planet.
At HKEX, the recently released guidelines for ESG reporting require listed firms to not only explain their impacts to targeted investors, but also provide a comprehensive outline for addressing future risks. Such good preparedness is what investors or clients want to see from the investment instruments of interest.
They have the confidence and assurance that their funds will help to make the planet a better home for all.
However, it is never easy to plan, and most companies rely on ESG investment consultants for help in calculating ESG Score + giving ESG consulting services. Some good ESG investment instruments of interest include:
- ESG funds.
- ESG stocks.
- ESG real estate.
- ESG indices.
Note that even when specific investments, such as sustainable funds, pension funds or ETFs, carry the tag ESG, it is prudent to carry out further due diligence. This can help to confirm that the business or asset is indeed committed to reducing every negative environmental, social, and governance impact.
What Companies and Organizations can Do to Improve their ESG Ratings
When investors do ESG screening to identify the investments of interest, the most important item is the sustainability rating. So, what are some of the actions that you can do in your company to make it more attractive to investors? Here are some expert considerations for enhancing sustainability and attracting investing clients.
- Reduce Your Organization’s Carbon Footprint
The biggest challenge facing the planet today is global warming and climate change and every investor, fund or pension scheme out there wants to feel he/she is helping to halt it right on its tracks. ESG investment consultants will tell you to focus on one thing: cutting down greenhouse gas (GHG) emissions. An excellent plan would be aligning the company’s strategy with the global target of achieving net-zero carbon status by 2050.
- Use Renewable Energy
Another awesome method of improving your ESG rating is shifting your company or organization’s operations to clean energy. This can also be part of the organization’s effort to cut down carbon footprint and reduce utility bills. Some good options for renewable energy include installing solar panels or windmills in your facility.
- Adopt ESG Reporting in Your Facility
When a company, fund, or real estate enterprise indicates that it is sustainable, investors want to see and verify the information. This is only possible through ESG reporting. This is a system of disclosure where a company showcases its operation impacts on the environment, people and governance.
Contrary to what some people believe, ESG is not simply about the final report. Rather, it is a comprehensive process that helps investors to see the journey that your company has followed to achieve targeted ESG goals.
For example, a report that shows a company has cut down its carbon footprint by 50% has to highlight the starting point and the strategy employed.
If these demonstrations are not there, the company will be labeled greenwashed.
To get it right in your ESG reporting process and attract more investors, you need to stick to the ESG guiding principles, especially accuracy and verifiability. Then follow these seven steps:
- Start by carrying out a comprehensive ESG risk and opportunities assessment.
- Involve stakeholders to understand what their preferences are.
- Do a materiality assessment to determine the best reporting topics.
- Develop specific objectives for your company. These can be broken down into individual targets for each department.
- Craft a good ESG plan. Make it as comprehensive as possible by highlighting specific key performance indicators (KPIs).
- Gather data along the way and analyze it. Do not shy from making adjustments if you realize that KPIs are not being met.
- Prepare your ESG report and present it to stakeholders.
The Benefits of Working with ESG Investment Consultants
The strategies that we have listed above are only a few of what you can do to make your enterprise or associated fund and stock sustainable to attract investors. In addition, you should work with ESG investment consultants. These are professionals in matters of sustainability, and you can count on them to get everything about ESG right.
Whether you are new and do not know where to start when targeting to improve your ESG score or your company is overwhelmed by different tasks, the services of ESG investment consultants can help.
The consultants will hold your hand to ensure you are taking the right steps until the expected results are achieved. Other benefits to expect from working with ESG consultants include:
- The experts can help you to ingrain sustainability in your organization’s operating strategy. This help can be directed to a specific area, such as climate change or target more actions, such as board diversity, waste management, empowerment, and greening programs.
- With ESG investment consultants, it is easy for managers to pinpoint the areas where investors are interested. For example, should you start by changing the product design to grow sales or shifting to a new supply line to acquire better materials?
- ESG investment consultants are crucial in improving your ESG score. You will find them particularly useful in optimizing the benefits of non-financial actions of your company. They also come in handy in preparing ESG reports that targeted investors read to decide whether they will work with you.
Whether your company deals specifically with investment or simply wants to attract sustainability-conscious investors, your best option is working with ESG investment consultants.
The expert consultants can help to improve the profile of your entity, making it outshine competitors in all markets, including capital markets. This assistance gives your company and its team of management a sense of satisfaction for the positive contribution towards addressing the challenges facing the planet.
Visit us, the leading ESG investment consultants, for more insights on calculating ESG Score + giving ESG consulting services to make your portfolio/instruments more attractive to investors.