Reete Rool
Sustainability Analyst
The Potential of the ESG industry
Despite its current shortcomings, ESG could in fact be an effective tool for advancing towards a more sustainable world. Though the ESG industry grew out of the need to provide investors with a more accurate measure to assess a company’s performance, shareholders are not the only party to be interested in evaluating corporate sustainability. Mandatory and standardised ESG reporting could decrease the information imbalance between companies and their stakeholders as well as introduce balanced disclosure of both positive and negative impacts – an issue which the current voluntary reporting frameworks have been unable to successfully address.
Most importantly however, the rising popularity of ESG investment creates a clear business case for sustainability. Despite the talk about switching to “stakeholder capitalism”, a cost-benefit analysis is inevitably still part of any company’s decision to address sustainability issues. While carbon emissions reductions can be tied to cost reductions then social sustainability actions, such as increasing board diversity, are much harder to quantify to financial benefits. Therefore, the pressure on ESG risk management can push companies to address sustainability in a more holistic manner and increase focus on social sustainability, which has so far been playing second fiddle to environmental issues.
Aside from the wider societal benefits, integration of ESG considerations into the company’s strategy is advantageous for a variety of reasons:
Moving towards standardisation
The ESG ratings, standards and frameworks industry is not yet mature, rendering ESG reporting rather challenging, however steps are being taken to increase standardisation and transparency. The EU is in the process of developing the Corporate Sustainability Reporting Directive (CSRD) in the aim of creating higher standards to ESG and sustainability reporting, the International Sustainability Standards Board (ISSB) was created last year in the hope of establishing a global baseline for sustainability reporting. The US Securities and Exchange Commission (SEC) has also recently unveiled their proposal for climate disclosures, with disclosures on corporate board diversity, human capital management and cybersecurity risk governance still in the works.
The field of ESG reporting is developing rapidly and the discussion on the advantages and disadvantages of upcoming developments will need to be left into another blog post. What is clear, however, is that setting higher standards for ESG reporting is of crucial importance as ESG investment continues to reach new heights with Bloomberg estimating ESG assets to exceed $50trn by 2025[i]. If the underlying assumptions of these 600+ ESG ratings, standards and frameworks are erroneous, then we are misallocating enormous amounts of resources and considering that the 2050 deadline for achieving net-zero is approaching with neck-breaking speed, we have little margin for error.
[i] https://www.bloomberg.com/company/press/esg-assets-rising-to-50-trillion-will-reshape-140-5-trillion-of-global-aum-by-2025-finds-bloomberg-intelligence/
Further reading:
Chatterji, A. K. et al. (2016) ‘Do ratings of firms converge? Implications for managers, investors and strategy researchers’, Strategic management journal, (8), pp. 1597–1614.
Eccles, R. G., Lee, L. E. and Stroehle, J. C. (2020) ‘The Social Origins of ESG: An Analysis of Innovest and KLD’, Organization and Environment, 33(4), pp. 575–596
Kölbel, J. F. et al. (2020) ‘Can Sustainable Investing Save the World? Reviewing the Mechanisms of Investor Impact’, Organization and Environment, 33(4), pp. 554–574
Ştefănescu, C. A., Tiron-Tudor, A. and Moise, E. M. (2021) ‘Eu non-financial reporting research – insights, gaps, patterns and future agenda’, Journal of Business Economics and Management, 22(1), pp. 257–276.
Veenstra, E. M. and Ellemers, N. (2020) ‘Esg indicators as organizational performance goals: Do rating agencies encourage a holistic approach?’, Sustainability (Switzerland), 12(24), pp. 1–15.
What is this?
Sharing your sustainability progress isn’t only a way to engage staff, customers and suppliers. It can be a powerful PR tool. It can help you stay one step ahead of your legal requirements. And it can help you with other ESG ratings like CDP, EcoVadis and Support the Goals. We’ll help you spread the word about the good you do.
Sustainability reporting
Our standalone Reporting service gives you a comprehensive 20-page (approx.) report to share with staff, customers, investors and the press. Comprising your priority goals, commitments, case studies and more, and designed to match your corporate branding, it’s the simplest way to bring all your sustainability work together.
What is this?
You’ll want to measure the results of your actions to assess progress towards your commitments. But what should you measure and how should you do it? When you don’t have the in-house tools, capabilities or expertise, we do.
Our support package can help
It’s not always easy to measure the impact of sustainability actions. There’s a clear formula for carbon reporting, for example, but how do you assess social impact? Where should the data come from? What are the accepted reporting standards? And how should you display your results to ensure people understand it? We and our partners can help you measure the impact of the actions you take.
What is this?
You take the next steps on your sustainability journey. We’ll provide the guide and the map.
Our support package can help
It’s not easy figuring out where to go next on your sustainability journey, or how to get there.
With a TBL support package, you get the expertise, the tools and the guide, and you follow a road we’ve already travelled – many times. It makes setting a direction easier. You follow established best practice so there are fewer dead ends. And with our tracking tool, you’ll always have a clear view of progress made and next steps.
What is this?
Once you’ve identified the sustainability goals that matter most to you, you’ll want to do something about them.
Commit is about setting measurable targets for meeting your highest priority goals. It’s about making the credible, impactful, achievable commitments everyone can buy into. And it’s about agreeing governance, so the right people are accountable for achieving the commitments you agree.
What might this look like?
For example:
• Gender Equality (Goal 5): 50/50 gender split at board level by 2025
• Affordable and Clean Energy (Goal 7): Use only clean energy to power offices by 2030
• Climate Action (Goal 13): Net zero across the value chain by 2035
Our support package can help
A TBL support package gives you access to expert advice that can help you set environmental and social commitments including net zero and science based targets.
If we want a more sustainable world, everyone needs to get involved. That includes your employees. Our experts help you do that in a way that builds understanding and encourages involvement.
We will:
What is this?
How do you know which sustainability/ESG issues to target, and which to tackle first? Identify is about exploring the issues that matter most to your organisation and finding where your actions can make the biggest impact.
How we’ll support you
Our lively half-day workshop explores the issues through the lens of the Global Goals. You’ll end the session with a clear, visual presentation of low, medium and high priority sustainability goals, and get clear guidance on what to do next.
If we want a more sustainable world, everyone needs to get involved. That includes your employees. Our experts help you do that in a way that builds understanding and encourages involvement.
We will:
A circular economy model designs out waste from your business, keeping products and materials in use. Operating a circular economy model can cut costs. Many organisations are now using it to create entirely new revenue streams.
Our experts will show you how, by adapting your processes, you can be part of the circular economy – and do it in a way that’s the right ‘fit’ for your organisation.
For compliance. To meet the standards of a ratings agency. Or simply to be a responsible business. When you need the right sustainability policies and standards, we’ll help you develop ones that are engaging, easy to understand and relevant to your business.
If we’re to create a more sustainable world, everyone needs the skills and understanding to be able to play their part.
Every day, our advisers are helping senior teams understand sustainability within their organisation. They’re teaching suppliers to buy more sustainably or building the skills of new in-house sustainability managers. And they’re helping your employees become more carbon literate so they understand what carbon is and the personal difference they can make in work and at home.
Build the skills and understanding of your people.
Reporting the environmental and social impact of your business is an essential part of governance, openness and transparency, but with so many frameworks, it can be difficult to know which should demand your focus.
Our experts will help you meet the mandatory requirements of regulatory frameworks like SECR. They’ll help you prepare for soon-to-be-mandatory frameworks such as the Task Force on Climate-related Finance Disclosure (TCFD).
And when you’re exploring new, voluntary accreditations with ESG, DJSI or Sustainalytics, or want to improve your ranking with a supply chain framework such as EcoVadis or Support the Goals, they’ll help you choose the framework best suited to your business, boost your rating and gain the badges.
Setting science-based emissions reduction targets consistent with Paris agreement-aligned pathways is how your organisation moves closer to net zero. We’ll help you establish your current baseline, then help you set the targets (including Scope 3) that give your actions direction and purpose.
And as always with our experts, we’ll make the journey easy.
For any large organisation, reporting your Scope 1 & 2 emissions is a regulatory requirement. You meet that requirement by making a Streamlined Energy & Carbon Reporting (SECR) statement part of your annual report.
Our experts can help you with that – and they can help you go further. Our simple, powerful dashboards will make understanding your carbon footprint easy (whether you’re required to report on it or not). And when you want to take the next step in understanding your indirect (Scope 3) emissions, we’ll help you do that too.
Increasingly, your clients and customers demand sustainability not just from the way you operate but from the materials you use.
Our experts in materials and packaging help you understand how sustainable your existing products are. Then we recommend alternatives that deliver improved sustainability whilst protecting production costs and product quality, and keeping customers happy.
A circular economy model designs out waste from your business, keeping products and materials in use. Operating a circular economy model can cut costs. Many organisations are now using it to create entirely new revenue streams.
Our experts will show you how, by adapting your processes, you can be part of the circular economy – and do it in a way that’s the right ‘fit’ for your organisation.
Increasingly, your clients and customers demand sustainability not just from the way you operate but from the materials you use.
Our experts in materials and packaging help you understand how sustainable your existing products are. Then we recommend alternatives that deliver improved sustainability whilst protecting production costs and product quality, and keeping customers happy.
Setting science-based emissions reduction targets consistent with Paris agreement-aligned pathways is how your organisation moves closer to net zero. We’ll help you establish your current baseline, then help you set the targets (including Scope 3) that give your actions direction and purpose.
And as always with our experts, we’ll make the journey easy.
For any large organisation, reporting your Scope 1 & 2 emissions is a regulatory requirement. You meet that requirement by making a Streamlined Energy & Carbon Reporting (SECR) statement part of your annual report.
Our experts can help you with that – and they can help you go further. Our simple, powerful dashboards will make understanding your carbon footprint easy (whether you’re required to report on it or not). And when you want to take the next step in understanding your indirect (Scope 3) emissions, we’ll help you do that too.
Reporting the environmental and social impact of your business is an essential part of governance, openness and transparency, but with so many frameworks, it can be difficult to know which should demand your focus.
Our experts will help you meet the mandatory requirements of regulatory frameworks like SECR. They’ll help you prepare for soon-to-be-mandatory frameworks such as the Task Force on Climate-related Finance Disclosure (TCFD).
And when you’re exploring new, voluntary accreditations with ESG, DJSI or Sustainalytics, or want to improve your ranking with a supply chain framework such as EcoVadis or Support the Goals, they’ll help you choose the framework best suited to your business, boost your rating and gain the badges.
If we’re to create a more sustainable world, everyone needs the skills and understanding to be able to play their part.
Every day, our advisers are helping senior teams understand sustainability within their organisation. They’re teaching suppliers to buy more sustainably or building the skills of new in-house sustainability managers. And they’re helping your employees become more carbon literate so they understand what carbon is and the personal difference they can make in work and at home.
Build the skills and understanding of your people.
You know you need a sustainability strategy – but what next? What’s right for the size and nature of your business? And how can you ensure it drives the right actions?
We’ll help you set a strategy that’s robust and comprehensive because it uses the Global Goals as a framework. And we’ll ensure it’s a good ‘fit’ for your organisation, helping you align people, planet and profit.
For compliance. To meet the standards of a ratings agency. Or simply to show you’re a responsible business. When you need the right sustainability policies and standards, we’ll help you develop ones that are engaging, easy to understand and relevant to your business.
Your social impact is the effect your organisation has on people and communities as a result of its activities and policies.
You’ll already be doing good things in your community. Measuring the effect of your charitable work, volunteering, community outreach projects and more is important because it’s how you explain the difference you’ve made to your employees, customers and investors.
We help you understand how to measure and improve your social impact.
Almost 90% of your environmental and social impact exists not in your operations, but in the goods and services you buy from your suppliers. So if you want to make a real impact with your sustainability efforts, your supply chain needs to be involved. Our advisers can help. They will:
You’ve done great things. Now you need to share them. Communicating your successes is a powerful PR boost for your brand. It’s often a simple way to improve your ratings framework score. And it can help others to understand the importance of the work you’re doing and inspire them to get involved.
Our brand, marketing and communications specialists will help you spread the word with a standalone sustainability report that brings all your ESG efforts together in one document. In addition, we can help you with:
You know you need a sustainability strategy – but what next? What’s right for the size and nature of your business? And how can you ensure it drives the right actions?
We’ll help you set a strategy that’s robust and comprehensive because it uses the Global Goals as a framework. And we’ll ensure it’s a good ‘fit’ for your organisation, helping you align people, planet and profit.
Your social impact is the effect your organisation has on people and communities as a result of its activities and policies.
You’ll already be doing good things in your community. Measuring the effect of your charitable work, volunteering, community outreach projects and more is important because it’s how you explain the difference you’ve made to your employees, customers and investors.
We help you understand how to measure and improve your social impact.
Almost 90% of your environmental and social impact exists not in your operations, but in the goods and services you buy from your suppliers. So if you want to make a real impact with your sustainability efforts, your supply chain needs to be involved. Our advisers can help. They will:
You’ve done great things. Now you need to share them. Communicating your successes is a powerful PR boost for your brand. It’s often a simple way to improve your ratings framework score. And it can help others to understand the importance of the work you’re doing and inspire them to get involved.
Our brand, marketing and communications specialists will help you spread the word with a standalone sustainability report that brings all your ESG efforts together in one document. In addition, we can help you with: