Empowering ESG Data
Informed decision-making and positive impact for a sustainable tomorrow
ESG – Environmental, Social, and Governance – these three interconnected factors constitute a comprehensive set of criteria used to assess and evaluate a company’s operations, beyond the traditional focus on financial performance alone.
The social dimension examines a company’s relationships with its employees, customers, suppliers, and the communities it operates within.
Considerations like diversity and inclusion, labour practices, customer satisfaction, staff safety, and community engagement fall within this category.
Governance pertains to the internal structure and management practices of a company.
It delves into areas such as board composition, executive compensation, transparency, and adherence to ethical business standards.
ESG’s Evolution from CSR
ESG is often regarded as a progression from Corporate Social Responsibility (CSR). As Elizabeth Pollman from the University of Pennsylvania highlights in “The Making and Meaning of ESG”:
ESG was coined to describe a set of issues to be integrated into enhanced financial or investment analysis, and has taken on meanings related to risk management, been treated as a synonym or subset of CSR or sustainability.
ESG extends beyond mere philanthropy and community involvement. It integrates social and environmental factors directly into a company’s core strategies. ESG recognises that sustainable value creation is intimately linked with responsible business practices and ethical decision-making.
Emergence of New Governance:
SECR Reporting and ISSB Standards
In response to the mounting significance of ESG, novel governance frameworks are emerging. The UK’s Streamlined Energy and Carbon Reporting (SECR) regulation mandates that companies disclose energy usage, carbon emissions, and related data in their annual reports. This promotes enhanced transparency and encourages carbon footprint reduction.
The International Sustainability Standards Board (ISSB) is at the forefront of establishing globally acknowledged standards for sustainability reporting. As these standards evolve, they will standardise ESG reporting practices across industries and nations, facilitating more precise comparisons and informed decision-making. In June 2023, the ISSB introduced the inaugural “IFRS Sustainability Disclosure Standards” with the goal of ensuring companies divulge information about sustainability-related risks and opportunities that might be significant to investors.
for ESG Reporting
Technological advancements have unlocked fresh avenues for companies to efficiently report ESG metrics. Submetering, for instance, offers a detailed breakdown of energy and resource consumption within assets.
This granular data empowers companies to identify inefficiencies and optimise resource utilisation effectively. It also enhances the quality of environmental data available for investor reporting.
Furthermore, technology can also assist vital elements of social data. For instance, indoor air quality monitoring can track the impact of CO2 on occupant health. By deploying sensors and monitoring systems, building owners can ensure a safe and healthy environment for both employees and visitors, thereby contributing to positive social outcomes.
How Positive ESG Agendas Benefit Companies
Positive ESG agendas are instigating transformative shifts in the corporate realm, providing tangible advantages to companies that embrace sustainability and responsible practices, such as:
Financial institutions recognise the enduring value of eco-conscious initiatives, often rewarding companies that incorporate ESG considerations into their strategies with favourable lending terms for debt finance and forward funding loans. This not only reduces financial burdens, but also fortifies a company’s financial stability and reputation as forward-thinking.
Enhanced Bottom Line
Companies that futureproof their assets and optimise energy consumption are reaping efficiency gains that significantly impact their Net Operating Income (NOI). By investing in technologies and practices that curtail energy usage and enhance resource management, these companies are able to trim overhead costs and enhance their bottom line for better business.
Emphasis on Sustainability
Buildings attract tenants seeking environmentally-conscious spaces while simultaneously reducing utility expenses. This harmony between sustainability and operational efficiency not only bolsters profitability, but also situates companies as eco-conscious – ideal when marketing properties to people who place a heightened emphasis on sustainability, something that is only going to become more common.