The financial fortunes of investors have, in the past, been littered with various trends and failures. Perhaps one of the most noted historically being the ��of 1720 when many investors lost their fortunes and their lives. Today we now have enhanced regulatory scrutiny in place and greater transparency into financial assets and investments, and the trading of slaves – thankfully – is no longer legal.

While as a society and a global economy we have concentrated on the wealth and economic security of the world, this has often been at the expense of our environment and climate. The poorest countries have suffered most from climate change widening the gap between wealth and poverty. Now climate change and societal opinions are also threatening wealthier countries and there is increased interest from governments, financial institutions, and corporates in better tackling this topic.

Most significantly, there is increased interest among investors, both institutional and individual, who recognise that investing in more sustainable products and services drives better outcomes for their returns and for the world they live in. In fact, Bloomberg estimates that ESG assets grew to .

A McKinsey & Company report – – also states: ‘More institutional investors recognise environmental, social, and governance factors as drivers of value. The key to investing effectively is to integrate these factors across the investment process.’

Reliable research by and confirms that good sustainability and ESG practices correlate with lower operating costs, better profitability and superior share price performance.

The role of Financial Services in driving sustainable outcomes

In driving better outcomes for society and the environment, the role of financial services is far greater than governing and reporting on their own ESG performance. It is to steer sustainable development by environmental and socially conscious financing, underwriting, claims management and investment decisions. Regulatory bodies globally now consider financial services firms to be part of the solution to the problem. Reputational damage is also key as seen from the impact of the Rainforest Action Network report which was published in 2019 and states: ‘… the climate crisis demands not just that banks seize the many opportunities for profit in the clean energy evolution, but also that they be prepared to fundamentally redraw their business models away from financing dirty energy. These banks’ clean financing is in any case swamped by the volumes they funnel into fossil fuels.’

There have been some earlier adopters of the climate change and diversity responses from large financial services organisations, and two great examples are:

• Munich Re: In the 1970s, Munich Reinsurance Company published its first assessments of the dangers of climate change, warning that rising greenhouse gas emissions would alter global systems and could lead to more floods, storms and droughts.
• State Street Global Advisors (SSGA): In March 2017, SSGA erected “Fearless Girl” in anticipation of����the following day. It depicts a girl four feet high, promoting female empowerment, originally placed staring down the “Raging Bull” of the New York Stock Exchange. Fearless Girl��was commissioned to advertise for an index fund that comprises gender-diverse companies.

Stakeholder pressures drive greater focus

Sustainability is at last being taken more seriously in financial services and greater transparency is being mandated by regulators – e.g. the coming into effect on 2021.

More and more financial services firms are signing up to the and , while there are over 3,000 investment and assets managers singed up to the (UN backed) .

The Bank of England, under its “One Bank Research Agenda” follow up study, assessed how climate change could affect a central bank’s ability to meet its . This included an assessment of the linkages between insured and uninsured losses on insurance firms and other financial institutions, such as banks and concluded that climate change, and society’s responses to it, present financial risks which impact upon the bank’s objectives and can cascade through the whole financial system. We should also not forget the potential impact of increased financial crime on the environment and the yet to be understood impact of Covid-19.

Collaboration is needed to avoid “green-washing”

Making and sustaining change will require a true collaboration between governments, financial services firms and corporate organisations. Data and reporting standards must be aligned for full transparency and better decisions. Shared platforms need to be developed to ensure this collaboration is successful and we can expect to see more and more taxonomies as the world gets fully behind sustainable outcomes.

We all need to make and drive better decisions and contribute to improving the world we live in, a world we bequeath to our children and their children. However, pending stronger regulatory governance and reporting and greater consumer awareness, ESG ratings and sustainability claims are exaggerated at best and deliberately misrepresented.

Unilever is a great exemplar for sustainability, having done more than make green investments by making sustainability part of its��corporate identity. BrewDog has also made significant investments and launched a series of unprecedented initiatives to help fight climate change, and recently announced it was the first international beer business to become carbon negative.

At the other end of the scale are companies such as Happy Egg Company, which claimed its eggs came from “happy hens” when they are produced by over 4.3m hens in cages.

Please no more “green-washing”. As consumers we are getting too smart to believe in PR spin about how free-range or ethical the products we buy are, how trustworthy the financial firms are that we deal with and how ESG the finds we invest in are – and our world is far too precious for that.

Look out for further articles which will examine more specifically the roles of banks, insurers, and investment managers in driving sustainable outcomes.

The post Sustainability In Financial Services – This Is Not The Time For PR Spin appeared first on �鶹ԭ�� UK News Center.

Central to changing customer expectations for consumer products businesses is that people have indicated a great willingness to vote with their wallets (and indeed their clicks) if they feel a brand isn’t stepping up to the mark. A Hotwire survey in 2019 found that almost half (47%) of internet shoppers switched product because of moral or ethical values; protecting the environment topped a list of reasons to switch.

Meanwhile, institutional investment decisions are now being made with these considerations front of mind. Over three quarters (76%) integrate ESG data into their thinking, elevating the role and significance of ESG reporting in consumer products even further.

Clearly, ESG is now business critical, as well as ethical. And this shift is driving a new way of looking at, and reporting on, ESG across the consumer products supply chain.

The question to businesses in the sector is how well prepared are they for modern sustainable business operations and ESG reporting?

Why ESG reporting and performance management matters for consumer products businesses

One of the key concerns around ESG for consumer products businesses is their supply chain. Depending on their exact business area (food, clothing, or beauty for example) there are different nuanced, multi-faceted paths a product can take from raw materials to arrival on the shelves – touching natural capital, land, communities, materials and energy.

In prior years, this was something even the businesses itself (alongside a few external stakeholders) could only monitor with difficulty. Today, however, things are very different. The end user wants to know more about that supply chain, and bases decisions on everything from labour conditions in factories around the world, to the use of water, sourcing of materials and carbon footprint.

The pressure is on to improve processes, reduce wastage in packaging, create efficiencies in distribution and enhance sustainability at every stage from production to sale. None of which can be done without a clearer view of business operations – from pollution, energy consumption and waste management, to labour and the supply chain.

The path to improved operational visibility

For businesses within the consumer products space, this all reinforces the point that sustainability performance management and ESG reporting is not simply a PR exercise. Rather, it’s a critical commercial matter – because without high quality, trusted reporting and management of ESG performance, the risk is loss of revenue and reputation.

However, many consumer goods businesses have complex supply chains that even they don’t fully understand, meaning it’s difficult to measure impact at every point of the operation. Complicating matters further, current ESG reporting capabilities are often some distance from ideal. Whether that’s because of a reliance on manual processes leading to human errors, the need to collect and integrate data from multiple disparate systems, the complex modelling requirements, the multiple reporting standards, or even that their intentions have run a little farther than their capabilities.

Countering that requires a fuller understanding of where consumer products businesses can make clear and consistent gains. For instance, with greater transparency businesses can make a better case to investors and consumers that they are improving – and implementing good practices. While more automated digital solutions can transform how reporting is managed, providing clearer outcomes against KPIs as well as identifying areas where businesses can make efficiency or cost gains.

Of course, every business will require a solution that’s specific to its needs and the unique nuances of its operations. However, there are some commonalities that most in the consumer products industry can benefit from.

To find out more about this, and how our Corporate Sustainability Reporting and Performance Management solution can help organisations move to a sustainable future: ESG reporting for the consumer products industry, read our new or check out our

The post How Consumer Demands Drive ESG Reporting & Innovation Across the Supply Chain appeared first on �鶹ԭ�� UK News Center.

The global COVID-19 pandemic has accelerated this trend. According to , in the first half of 2020 net inflows into ESG funds in the US reached $21 billion, nearly equalling the total amount for the entirety of 2019, which was in itself a record.

In a world where consumer and investor decisions are increasingly influenced by sustainability credentials, ESG is now seen as a base for opportunity, growth and value by asset managers. The major global investor now ‘focuses on integrating ESG risk and opportunity factors into investment decisions’. According to the latest data from 2018, a third of investors are using ESG assessments to decide what companies to exclude from their portfolios, while an additional third are integrating ESG into investment decisions.

s aim to make financial services an agent of change by requiring the sector to report the ESG performance of its investee companies. And, the EU regulation��on Sustainability-Related��Disclosures, taking effect March 10, 2021, hopes to enhance transparency as it requires asset managers to integrate ESG considerations into their practices.

Key stakeholders in the corporate reporting world, such as the IFRS, the UK’s FRC and ESMA, have made it clear that more standardised, relevant and comparable information is required to support this new regulatory environment. For businesses, this increased focus on their ESG reporting provides an opportunity to showcase sustainability in their business models, link it to performance, and capture a lower cost of capital.

Yet it also represents a clear challenge. Many companies have made strides towards giving ESG a greater focus. However, it remains the case that a great number are still far too reliant on legacy ESG reporting tools, manual processes and a lack of dedicated resource. Most businesses are fully cognizant of the direction of travel for ESG reporting and they’re making headway with more sophisticated reporting, providing investors with the assurance they need alongside internally highlighting inefficiencies that need reforming.

However, there is significant work needed to provide investors with the clear, authoritative and error-free reporting that they demand to take advantage of the opportunities many believe ESG will provide.

From a company’s perspective, failure to rise to the challenge of improved reporting means that investment may find its way elsewhere to competitors. As investment flows become more and more influenced by the quality of integrated reporting and sustainability performance, the cost of capital for better performers will continue to fall relative to that of poorer performers.

With sustainable investment portfolios around the world, the business case for ESG reporting improvement and transformation is clear. It’s now down to businesses to harness the new tools available to them, and to make changes that will benefit their business, their investors and the planet.

To find out more about this, and how our Corporate Sustainability Reporting and Performance Management solution can help, read our new or check out our .

The post Invested in The Planet: How The World’s Asset Managers are Focusing on Environmental and Social Governance appeared first on �鶹ԭ�� UK News Center.

As concerns around climate change and water scarcity continue to grow,��sustainability��across a wide range of dimensions is��being brought to the forefront of the way��utilities��operate.��Many of these dimensions are captured in the��measures of environmental, social and governance (ESG),��which collectively establish a��“sustainability”��framework for assessing a company’s��performance��in everything��from greenhouse gas emissions to employee health and safety.��

ESG reporting is transforming from being a��‘nice-to-have’ to a��fundamental business��need. Utilities ��������doubling-down��on efforts to establish a comprehensive reporting methodology that��takes into account��the expectations of��a��number of��stakeholders, including financial investors, regulators,��customers and��employees.��

Meeting the ESG reporting��and performance management��challenge��

The��increased focus on��sustainability performance – as represented by ESG��–��and the��associated��demand for high quality data, has grown faster than companies’ ability��to provide��it in a robust, automated, auditable way.��Now, as customers, investors and regulators seek more transparency,��current ESG reporting capabilities need to be assessed��against their capability to deliver��evolved��requirements.��For the most part, they fall short.��

Reporting of operational performance, including ESG, tends to be reliant on��manual processes��and, as a result, reported��data��is often��incomplete and not��standardised.��ESG performance, or the impact on ESG performance, can’t be integrated into investment decisions as it is not linked to financial data.����This makes it challenging for the Board to steer the business as ESG data is not generally as available or trusted as financial data for investment decisions.��

The lack of solutions that enable real time��insight into ESG��performance��has in the past prevented utilities from experiencing the full benefits of better��sustainability��reporting��and performance management.��But now,��with ESG becoming a boardroom issue, practical steps are being taken to update how sustainability reporting is carried out,��based on an enterprise-grade platform which provides trusted data to stakeholders inside and outside��businesses.��

Benefits of improved ESG reporting��

If utilities can��transform how they report on ESG issues, the benefits they receive��will��extend to diverse areas of their operations. For example, credit rating agency����has found that ESG considerations are now a factor that lenders take into consideration when offering loan pricing.������

Linking loans and other forms of finance to��corporate sustainability performance��(and carbon emissions in particular)��is��one recent innovation��–��but��it will not be the last method investors use that requires advanced ESG data.��This means that utilities��need to ensure the platforms they use for ESG reporting��are able to��support��a robust due diligence process that finance providers will undertake when testing achievement��against��contracted��ESG targets.��

Beyond this,��ESG performance��will��also provide competitive advantages and unlock value creation. For example, through zero carbon��energy��or water��provision,��increased customer loyalty and differentiated pricing.����

These kinds of��developments��are part of the future for��the entire utilities industry. And��they��make new��ESG��technology decisions paramount for businesses that are serious about investment and prosperity, as well as sustainability.��

Corporate Sustainability Reporting and Performance Management by �鶹ԭ��, allows you to understand and manage your environmental impact and report against a range of different ESG standards. To find out more about this, and how �鶹ԭ��’s capability can help, read our new or check out our .��

The post Transforming ESG Reporting For Utilities appeared first on �鶹ԭ�� UK News Center.