Climate change continues to be a global threat causing organizations to face more climate-related risks, which means investors and companies are taking a closer look at environmental, social, and governance (ESG) factors and how they weigh into investment decisions and business processes.
ESG factors aren’t typically part of traditional financial analysis, yet they still have financial relevance and consequences. Some examples of these factors are how organizations respond to climate change, how they protect worker health and safety, how they manage supply chains, and how they build trust and foster innovation.
To navigate the new climate-change-based economy, companies need to build resilience into their business strategies.[1] A new Enablon whitepaper talks about how corporate commitment to ESG is increasing and how the reporting of ESG disclosures allows investors to make informed assessments of risk and return for financial stability.
ESG investing expected to surge during a global crisis
One may think that investing in ESG may be put on hold because of the COVID-19 pandemic, but the opposite has been the case. A CNBC article[2] predicts that ESG and sustainable investing will increase in the wake of the pandemic, primarily because the coronavirus and society’s handling of it have altered people’s values.
Research from J.P. Morgan[3] comes to a similar conclusion, namely that the pandemic has accelerated the idea that a more modern and conscious approach to investing is needed. It’s easy to see the parallel between unforeseen risks like the COVID-19 pandemic and the issue of climate change.
ESG disclosure reporting continues to increase
In its latest report[4], G&A found that 90% of S&P 500 publicly-traded companies published a corporate sustainability report. This far exceeds the 20% of companies who published an ESG report during 2010. Every year, more companies are releasing sustainability, citizenship, or ESG reports, creating an environment where this type of reporting is not just voluntary, but expected.
Integrated solutions for environmental and sustainability management
Managing ESG data, disclosures, and reporting is daunting for any organization, considering the volume of potential data, the variability of reporting quality, and the numerous methods of disclosure. Fortunately, there are enterprise software solutions that can assist organizations in collecting and managing ESG data, forecasting potential climate risk, and keeping sustainability initiatives on track.
Enablon solutions make it easier and faster to collect data while also driving improvement and reporting what matters to stakeholders. Identify the easy wins to make large gains in ESG performance, and increase organizational adaptability to changes with an integrated suite of solutions for environmental and sustainability management.
To read more about achieving organizational objectives with ESG, the differences between various ESG reporting standards, and recommendations for ESG disclosures, download the whitepaper.
[1] World Business Council for Sustainable Development (Sep 18, 2019). Business climate resilience: Thriving through the transformation.” https://www.wbcsd.org/Programs/Climate-and-Energy/Climate/Climate-Action-and-Policy/Resources/Business-Climate-Resilience-Thriving-Through-the-Transformation2
[2] Stevens, P. (Jun 7, 2020). Sustainable investing is set to surge in the wake of the coronavirus pandemic. https://www.cnbc.com/2020/06/07/sustainable-investing-is-set-to-surge-in-the-wake-of-the-coronavirus-pandemic.html
[3] J.P. Morgan EMEA Equity Research. (Jul 1, 2020). Why COVID-19 could prove to be a major turning point for ESG investing. https://www.jpmorgan.com/global/research/covid-19-esg-investing
[4] Government & Accountability Institute (Jul 2020). 2020 S&P 500 Flash Report. https://www.ga-institute.com/research-reports/flash-reports/2020-sp-500-flash-report.html
