Category Archives: ESG Investments

ESG Investments, ESG/CSR, News

S-RM: Two thirds of companies expect ESG budgets to increase over the next five years

S-RM, leading global intelligence and cyber security consultancy, has published its 2024 ESG Report which reveals corporate concerns are shifting from traditional environmental issues to social – with human rights and modern slavery, EDI (equality, diversity and inclusion) and community programmes taking centre stage amongst corporate ESG strategies.

In 2024 the landscape of ESG considerations has taken a seismic shift as companies re-evaluate their priorities. According to S-RM’s recent findings, social governance is going to be a bigger strategic and budgetary priority for a substantial portion of companies over the next five years.

Regulatory concerns

Nearly a quarter (23%) of corporations have identified ‘domestic modern slavery laws’ as their foremost regulatory concern, compared to 15% prioritising the CSRD (Corporate Sustainability Reporting Directive). This focus underscores the growing acknowledgment of the importance of social issues and human rights in ESG strategies.

Despite the higher threshold of the recently-passed CSDDD in Europe, only 13% of corporates considered it the most important regulation for them to consider, suggesting that they may be caught out as the EU progresses its ESG agenda in coming years.

Further to this, approximately one-quarter of both investors (24%) and corporates (26%) lack awareness of social issues or challenges within their industry, underscoring a critical knowledge gap.

Some of the negativity currently surrounding ESG comes from considering it purely as an asset class, when ideally it should be integrated into the governance structures of a company. This lack of understanding poses significant operational risks to businesses that do not consider the direction of travel, potentially impacting reputation, stakeholder relationships, and long-term sustainability. Addressing this gap is crucial for integrating social considerations into ESG frameworks effectively.

ESG alive and well

The momentum towards Social is further emphasised by the anticipation of increased ESG budgets over the coming years. A remarkable 66% of companies expect their ESG budgets to rise within the next five years, with a substantial allocation earmarked for addressing social concerns. This trend not only highlights the evolving corporate approach to ESG but also underscores its emergence as a crucial commercial driver.

Natalie Stafford, Director and Head of ESG at S-RM, said:

“At S-RM, we recognise the continued importance of addressing the social elements within ESG strategies. Our survey has highlighted the widespread lack of confidence that the Social pillar of ESG is being sufficiently tended to, with risks mitigated and value exploited across both investor and corporate groups. There is a clear consensus that Social risks are rising up the corporate and investor agendas, driven by a combination of employee retention, shareholder pressure, board instruction, regulation and legislation, and consumer and client demand.

“Our findings demonstrate that in the corporate world, ESG remains firmly on the board agenda, supported with growing budgets among 66% of companies. We’re observing a shift towards increased budgets tackling social issues specifically over the next five years.”

For more information, access the full 2024 ESG Report on S-RM’s official website here: https://www.s-rminform.com/esg-report-2024

Accountancy & Accounts, ESG Investments, ESG/CSR, News, Wales News

Accountancy and finance professionals must drive the journey towards social equity, says ACCA report

The future of our organisations and society itself depends on sustainability and a just transition

Accountancy and finance professionals are at the forefront of the transition to a sustainable future according to the latest research by ACCA (the Association of Chartered Certified Accountants). Finance professionals from around the world – including Wales – shared their views, resulting in ACCA’s new report ‘Accounting for Society’s Values’.

Organisations need to transition to a sustainable future that embraces the economic, environmental and social aspects in combination. Society faces long-term challenges from social injustice, with stakeholders and regulators increasingly focusing on the social implications of the actions of organisations. That’s why defining and measuring the return to society by an organisation’s activities is becoming as important as the financial objectives themselves.

The accountancy and finance profession needs to see this as an opportunity to define its future role and put the social agenda at the core of the profession.

 

Three key messages from this report:

  1. The profession’s future embraces sustainability through social equity and protecting the environment.
  2. Measuring the social agenda is difficult, but we must act.
  3. There is a strong business imperative to embed this agenda into strategy now.

 

Helen Brand OBE, ACCA chief executive, commented: “The social agenda is a broad one and requires organisations to act now. Without the valued and proactive input of the accountancy and finance profession, the goal of reaching sustainability for all organisations will be unattainable. The profession has an opportunity to play its full part in enabling the just transition, not least the social aspect – one that it cannot afford to shirk.”

 

Report author and senior insights manager at ACCA, Clive Webb, said: “Whilst the emphasis for many organisations may have become focused on the environmental aspects of a just transition, it is important to ensure that nobody is left behind.”

 

Lloyd Powell, head of ACCA Cymru/Wales, said: “The social agenda is a vital element of the transition and whilst it may present challenges in readily measuring progress this cannot be an excuse for a lack of action. Accountancy and finance professionals need to be at the forefront on ensuring that their organisations measure and report performance in this area if we are to be a just society.”

 

For more information, read the full report on the ACCA website.

 

ESG Investments, Finance and Banking, News

UK finance functions embracing ESG and feeling upbeat on business prospects for 2023

Environmental, Social and Governance (ESG) is now firmly established as a decision-making factor in the UK’s finance functions, according to new research from American Express. The study reveals that nine in 10 (89%) financial leaders say ESG factors are important when it comes to business spending and investment decisions.

The research[1], based on a survey of senior finance decision makers at larger UK businesses, found that finance functions have already put in place KPIs (Key Performance Indicators) and metrics to measure business performance across various ESG pillars. These include ethics (70%), carbon reduction (69%), employee diversity, equity and inclusion (DE&I) (66%), supply chain equality and fairness (64%) and energy use, reduction or sourcing (63%).

Topping the list of areas where KPIs on ESG are not currently in place but where finance leaders have plans to implement are: Customer DE&I (35%), community outreach (33%), giving and philanthropy (33%) and climate risk (32%).

The survey also found that finance functions are helping lead the charge on environmental sustainability, a vital component of ESG activity, with more than a quarter (27%) saying that tackling sustainability is a pressing challenge for their business in 2023.

While six in 10 (60%) finance leaders at these larger UK businesses say that business travel is important to the success of their business – underlined by the fact that almost half (46%) expect to spend more onbusiness travel / T&E in 2023 – over three quarters (77%) acknowledge the need to balance business travel with greater focus on environmental sustainability.

Stacey Sterbenz, General Manager, UK Commercial at American Express, said: “Given the challenging operating environment, it’s encouraging to see UK finance functions, and the businesses they serve, embracing ESG principles when it comes to spend and investment decisions. It’s clear that finance teams in partnership with their colleagues across the business, are leading the charge to improve and manage their impact on the world they operate in.”

Optimistic mindset

Drawn from an upcoming report from American Express that delves deeper into finance leaders’ main priorities and challenges, the research finds this group with a strong sense of optimism heading into 2023, despite the challenging external environment.

Overall, 92% of senior finance decision makers from larger businesses are feeling confident about the prospects and performance of their business in the next six months; a similar number (88%) reported the same for the next 12 months. Furthermore, six in 10 (60%) anticipate that their business’ financial performance will be better this year, compared to 2022, with only around one in seven (14%) expecting their performance to suffer this year.

The research found almost all the finance leaders surveyed are taking multiple steps to improve their competitiveness including reducing operating costs (38%), boosting sales and marketing activity (34%), increasing automation and technology adoption (30%) and renegotiating with suppliers (27%). Just one in 10 planned to scale back their business’ growth plans.

Stacey Sterbenz continued: “Our research found finance leaders in bullish mood and focused on a range of actions to improve business competitiveness. Significantly, the vast majority have no plans to scale back their growth ambitions. In this context, it’s imperative that finance teams have access to high quality data and insights to support agile decision-making and retain visibility and control over spend.”

Despite their optimism, it’s clear that finance leaders will remain focused on mitigating risk in 2023, with about eight in 10 (81%) saying that a more flexible and agile finance function is important for the year ahead, and 85% stating more accurate forecasting will be critical to success.

—

METHODOLOGY:
[1] American Express commissioned Opinium Research to survey 250 senior decision makers from companies of 250+ employees. The research was conducted between 16th December 2022 – 4th January 2023.

Business, ESG Investments, ESG/CSR, News

Mining sector puts energy into ESG, but lacks focus on gender and diversity

Demand for greater transparency fuels shift in sustainable approach, finds new survey

Energy efficiency has soared up the list of environmental priorities for the mining industry and now features in the top three for most companies, along with air and water pollution and waste management.

It’s one of the key findings from a survey of global mining sector decision-makers published today (Friday) by mining executive search and recruitment consultants, Stratum International, and independent ESG accreditors, Digbee.

Tackling climate change and biodiversity loss come lower on the list of environmental, social and governance (ESG) factors for many mining businesses, according to the new report.

And there’s a concerning lack of focus on gender and diversity for a sector which needs to change the perception that mining is a male-only environment. The issue is deemed the “least important” social priority for mining companies over the next two years.

 

Will Coetzer, Founder and Director at Stratum International, said: “The mining industry has a unique opportunity to set a new standard for ESG globally and be seen as a hero rather than a villain.

“Mining is critical to the energy transition. But businesses must put a solid ESG strategy at the centre of everything they do, in order to attract new pools of capital for the sector and turn the tide on low levels of investment.

“Without an ESG strategy, mining firms will be hard-pressed to secure funding and shareholder confidence, and talented mining professionals are unlikely to want to work for such businesses.”

The survey of mining professionals from 29 countries suggests that although ESG has become a key discipline within the industry, it is still not deemed important by 2% of respondents.

 

For the rest, the biggest drivers for ESG are industry expectations (28%), pressure from stakeholders, investors and NGOs (26%), international standards related to ESG and sustainability (19%), and regulatory requirements (13%).

The survey shows that nearly three-quarters (71%) of respondents considered ESG important in decision-making at Board level, two-thirds (66%) thought it important to compare ESG credentials with others across the sector, and more than three out of five (63%) thought an independent analysis of ESG credentials was important.

 

Jamie Strauss, Founder and CEO at Digbee, said: “There’s huge pressure from industry, investors and other stakeholders for mining firms to be more transparent and report their ESG strategies. It’s not enough to just set and communicate sustainable targets. It’s also key to show how mining companies are progressing to, and achieving those goals.

“Failure to do so will negatively impact future investment opportunities. That’s why the winners will be the ones who swiftly address potential risks and quickly seize the opportunities for ESG innovation.”

 

You can download a copy of Stratum International’s report, here.

 

ESG Investments, Finance and Banking, News

Are investors seeing through the smoke and mirrors of sustainable investments?

With the tremendous growth of sustainable investments over the past decade now slowing down, as accusations of greenwashing and “fake it ‘til you make it” are bandied around the sector, CAMRADATA’s latest whitepaper on Sustainable Equity explores how far equity funds have come and what needs to be done to ensure their sustainability.

The whitepaper includes insights from AllianceBernstein, American Century Investments, Sanlam Investments UK, Isio, Cambridge Colleges’ Federated Pension Scheme, WTW and XPS Pensions Group who all attended a roundtable hosted by CAMRADATA in London in July.

Sustainable equity investing has gone from fringe and niche to fully mainstream over the past few years. Inflows hit an all-time high amid the pandemic as investors reflected on the implications of their capital allocations. Yet inflows to funds with a sustainable label have slowed down in the last 18 months.

The report considers if this is just a blip while investors reassess and what the future might hold. It looks at the attitude shift among institutional investors over the past five years that is driving momentum in sustainable investing and the “boom” in the DC pensions market for various ranges of ESG self-select funds.

It explores the challenges, opportunities and risks in sustainable equity investing, and evolving attitudes and regulation across the world which mean investors must adapt. It also looks at the importance of engagement and voting in sustainable investing.

CAMRADATA’s report ends with a look at what’s next for sustainable equity funds – with biodiversity highlighted as set to become the next big topic of conversation.

“Natasha Silva, Managing Director, Client Relations, CAMRADATA said, “With only a few exceptions, financial institutions around the world have rushed to offer a dazzling array of new products, ranging from exclusion funds to straight-up impact vehicles.

“But with such a large (and profitable) bandwagon comes the inevitable issue of smoke and mirrors; and, thanks to such a rapid and unstructured rise investors are relying on acres of data fields that range from unstandardised to downright deceiving, leaving them caught in a bind.

“With equity funds leading the sustainability pack by some margin – both in terms of product and inflows – our whitepaper offers valuable insight on the growth of sustainable equity investing, what’s behind the slow down and how it can be sustained in the future.”

The whitepaper also includes three opinion articles from the sponsors:

 

  • AllianceBernstein – ‘Carbon Handprints: A New Approach to Climate-Focused Equity Investing’
  • American Century Investments – ‘Sri Lanka: A Cautionary Tale About a ‘Just Transition’ to Sustainability’
  • Sanlam Investments – ‘Reflections of a sustainable investor’

 

To read the Sustainable Equity whitepaper, please click here.

For more information on CAMRADATA visit www.camradata.com.

Climate, ESG Investments, ESG/CSR, Investment

With the honeymoon period for responsible investing fading how can investors play a role in climate transition?

CAMRADATA’s latest whitepaper, Climate Transition warns that the uncertainty surrounding climate change can get lost in the constant references to a 1.5°C rise in average global temperatures. It explores the complications of climate transition and asks how investors can design their portfolios to meet the challenges ahead.

This latest whitepaper offers insights from firms including Amundi Asset Management, Mackenzie Investments, Isio, Scottish Widows, Transport for London and WTW who all attended a roundtable hosted by CAMRADATA in London in May.

The report highlights the resurgence of fossil fuel prices and the value of companies that produce them, which is a reminder that decarbonisation will not be a straight path.

Panellists shared their views and discussed whether they had raised or reviewed their exposure, or those of their clients, to the energy sector over the past 18 months.

The report also considers the challenges with ESG data, including which set of data would most improve investors working lives, the obligations for large pension firms to publish data and concerns around data quality. also It also covers what policies the investors and asset managers would implement if they were Prime Minister for a day.

Natasha Silva, Managing Director, Client Relations, CAMRADATA said, “The last decade was a honeymoon for responsible investing when pension funds and insurers could earn handsome returns from carbon-light tech stocks. Meanwhile, the oil and gas sector has been a tricky performer since the Global Financial Crisis.

“Now they have come back with a vengeance post-Covid, at a time when the manufacturing costs of renewables, like so many industrial processes, have risen on the back of supply bottlenecks and greater labour costs. Ultimately much of the responsibility for steering humanity rests with political leaders.

“But companies and their shareholders also have a role to play in transitioning society from unsustainable to sustainable ways of living. They have plenty of cash to deploy on the right technologies, and the coming decade will see whether governments and capitalism can work well together to minimise climate change.

“Our latest whitepaper shares insight on the opportunities and challenges ahead, as the race to change human behaviour and save the planet gathers pace.”

To read the Climate Transition whitepaper, please click here.

For more information on CAMRADATA visit www.camradata.com

Climate, ESG Investments, ESG/CSR, News

CAMRADATA launches new ESG Performance Universes to help investors analyse fund performance

CAMRADATA, a leading provider of data and analysis for institutional investors, has just launched a Sustainable Finance Disclosure Regulation (SFDR) classification within its CAMRADATA Live platform to give investors precise, in-depth analysis on the integration of sustainability characteristics within their funds.

CAMRADATA Live is the only database providing free access to this information to all institutional investors using the platform.

Investors can use SFDR article filtering across 500 products currently, which is the first step in providing more in-depth ESG data to the industry.  This number looks to increase as more asset manager add SFDR articles to their vehicles.

A recent report from iShares by Blackrock[i] highlighted investors expect to dramatically increase their sustainable assets by 2025, transitioning their portfolio and making sense of the data are two of the main challenges they face.

Amy Richardson, Managing Director, Business Development at CAMRADATA said, “Having greater transparency across ESG is a key requirement amongst institutional investors, and the SFDR requires fund managers to provide transparent ESG information for all sustainable investment vehicles.

“Our new SFDR classification now makes it easier for asset managers and investors to see how well the integration of sustainability characteristics within their funds are performing.

Since the launch more than 500 funds have been classified and are broken down into Articles 6, 8 and 9 – the classification of funds depending on their level of sustainability as required by SFDR. The asset types of the funds are varied across Equity, Fixed Income, Multi Asset and Private Markets.

As a further extension to their provision of ESG data to the industry, CAMRADATA is also pleased to be providing all members of the Investment Consultants Sustainability Working Group (ICSWG) with free access to CAMRADATA Live and collection of the group’s ESG data.

For access to CAMRADATA Live please contact info@camradata.com.

 

[i] https://www.visualcapitalist.com/sp/investors-top-5-esg-challenges/

ESG Investments, ESG/CSR, Finance and Banking, News

ESG Causes Activist Campaigns to Heighten

ESG: The Bellwether of Future Financial Performance Causes Activist Campaigns to be Heightened

  • According to New Shareholder Activism in Europe 2022 Report by Insightia, a Diligent brand
  • With a near 10% YOY increase in the number of UK companies subjected to activist demands since 2021 (with a major increase at large-cap UK firms)
  • Shows a 400% YOY increase in activist campaigns aimed at UK consumer defensive companies
  • UK management teams are more likely to settle with activists than European counterparts.
  • More than half of UK engagements for board seats concluded in settlements (2021)

ESG has totally altered the investor equation.  It is now seen as a bellwether of future financial performance, according to a new Shareholder Activism in Europe 2022 report launched by Insightia, a Diligent brand and provider of shareholder activism, shareholder voting, and corporate governance data. It shows activist investors focusing heavily on ESG as a core measurement of valuation.

The data shows an almost 10% YOY increase in the number of activist campaigns at UK companies year-to-date, compared to the same period in 2021. Of the 25 campaigns, 10 were at large-cap companies – twice as many as in the same period in 2021.  Diligent has also found a 400% YOY increase in activist campaigns aimed at UK consumer defensive companies during that same period (Jan – May 2022). It is clear the rise of ESG performance as a driver of a company’s broader value and good financial standing, is now more under the microscope than ever before, especially for investor prospects.

Interestingly, UK management teams are more likely to settle with their activists than their European counterparts and in 2021, more than half of UK engagements for board seats concluded in settlements. In comparison, in continental Europe, just around a quarter reached amicable resolutions, although this was an improvement over previous years. With the pandemic accelerating awareness of human capital management and supply chain issues, the report found climate change and a diverse array of social issues are now front of mind.  As European deal making ramped up in 2021, so has activist opposition to deals deemed detrimental to minority investors.

Business Advice, ESG Investments, News

Why start-ups need an ESG strategy to unlock funding

Jasiel Martin-Odoom  from Impact investment specialists Unreasonable Collective explains the importance of an ESG strategy for start ups:

 

Ever wondered why some start-ups seem to outperform their competitors and attract more funding? One of the differentiators is often Environmental, Social and Governance (ESG) reporting.

As the climate crisis accelerates, companies of all sizes have an obligation to build a more sustainable future by committing to important goals that help achieve positive climate action.

ESG provides the framework that holds companies accountable to these environmental goals and also ensures they follow good social and governance practices.

However, demonstrating a robust ESG strategy is not just good for your company’s social responsibility, it also plays a critical role in unlocking funding by positioning you as an attractive investment opportunity.

 

Importance of an ESG strategy

An ESG strategy involves analysing a company’s ‘Environmental’, ‘Social’ and ‘Governance’ risks. This includes assessing and measuring the impact of your environmental management, air pollution, water and energy etc. for ‘Environmental’, equality, privacy and security, health and safety, human rights etc. for ‘Social’ and corporate behaviour, risk manager, anti-bribery and corruption for ‘Governance.’

To attract investment, a start-up needs to incorporate ESG capacity into the structure of the company. In the early stages, your company may not seem very risky from an ESG perspective, but any unidentified ESG issues will likely scale as quickly as your start-up if they’re not addressed. This is something that investors will be watching out for and may deter them from investing.

 

Lowering financial risk

From an investor’s perspective, start-ups that have sustainability as a core value and demonstrate a solid ESG strategy, are a lower risk. An ESG strategy indicates that a company is less vulnerable to potential regulatory violations or lawsuits and better able to adapt to meet the needs of the transition to a green economy. Especially as scandals around poor environmental, social or governance can have a huge impact on a company’s bottom line and its future in the market.

The Boohoo scandal from a few years ago is a case in point. When Boohoo’s lack of governance was exposed by an undercover Times investigation revealing workers at some of its Leicester factories were being paid as little as £3.50 an hour, fund managers and retail investors sold their shares to distance themselves from Boohoo due to its worrying lack of governance. While the company isn’t a start-up, this scandal demonstrates the impact inadequate governance practices have on the investment community.

 

Assessing your impact

With many companies claiming to have an ESG strategy, an investor’s role is often determining whether the ESG strategy has merit. Third party ratings like B-Corp Certification are useful signals, however a start-up needs to go beyond certification, to identify, measure and track its impact across ESG. The United Nations’ Sustainable Development Goals (SDG), for example ‘Ensure sustainable consumption and production patterns,’ and ‘Reduce inequalities’ provides useful metrics by which start-ups can begin tracking their impact.

Furthermore, as two-thirds of investors see ESG criteria as core to their decisions over the next three years, and Silicon Valley is now declining investment if ESG risks are not adequately addressed, founders need to be aware that failing to disclose how your business is compatible with the green economy or failing to demonstrate how it has adequate social and governance practices, could result in less funding.

However, the pressure is not only on start-ups to care about ESG; Limited Partners and funders of VCs are increasingly requiring VCs to have a clear focus on ESG as part of their investment thesis. With diverse founders disproportionately starting impact-focused businesses, VCs may also find that a committed focus on ESG will help diversify their pipeline.

 

Helping start-ups stay ahead of the curve

As society’s awareness of environmental and social issues continues to grow, it’s clear that greenwashing is no longer an option for any sized company. For start-ups, being a first-mover as an ESG focused outfit will help attract VC funding and give you a strong competitive advantage.

This not only includes creating a solid ESG strategy to show that you’ve reduced the inherent reputational risks in your business but also taking the extra step and measuring the impact by collating the right data points to demonstrate that you are low risk.

So, to engage investors, unlock funding and stay ahead of the curve, ensure you create, track and report on your ESG strategy as soon as possible after setting up your business.

 

About the author

Unreasonable Collective is a leading impact investor and part of The Unreasonable Group which accelerates the growth of high impact companies that are solving humanity’s most pressing challenges.

 

 

 

ESG Investments, News

Accounting firm HURST joins United Nations network to accelerate ESG strategy

Accountancy firm HURST has joined a global network of businesses as it accelerates its environmental, social and governance strategy.

HURST is the first independent accountancy firm in the UK to become part of the UN Global Compact network.

Launched in 2000, the network has become the world’s largest corporate sustainability initiative, with more than 14,000 member companies in over 160 countries. Just under 800 UK businesses are members.

The network is a platform for the development, implementation and sharing of responsible business practices aligned to 10 universally-accepted principles in the areas of human rights, labour, environment and anti-corruption, with the aim of contributing to a more stable and inclusive global market and helping to build prosperous and thriving societies where business can succeed.

Members also pledge to take action in support of the UN’s Sustainable Development Goals.

The 17 goals include eradicating poverty and hunger, and promoting good health, wellbeing, education, affordable and clean energy, gender equality and responsible consumption and production.

HURST chief executive Tim Potter said: “As a firm, we all recognise how important it is that we make a positive impact on the world in which we live. Having a meaningful and progressive approach to ESG is ingrained in our values and practices.

“We are also conscious that the ESG agenda has become more important to our clients, suppliers and staff.

“Business has a key role to play in making the world a better place, and we are proud to become part of the UN Global Network and its UK chapter, joining thousands of other companies which are similarly dedicated to taking responsible action.

“We’ve not joined just for the sake of the badge. We are committed to making a tangible difference, and our participation in the network will enable us to achieve this.”

HURST has implemented a series of eco-friendly measures over recent years, stepping up its use of recycled and sustainably sourced products, ranging from pens and office paper to coffee and branded materials. The firm is also installing a charging point for electric vehicles at its Stockport HQ.

Tim added: “We are living and breathing it and we are always looking for new ways to improve. The network provides the perfect opportunity to do this.”

Steve Kenzie, executive director, UN Global Compact Network UK, said: “The core of the United Nations Global Compact’s mission is to support companies doing business responsibly by aligning their strategies and operations with 10 universal principles on human rights, labour, environment and anti-corruption.

“We also support business taking actions to advice the Sustainable Development Goals. We are delighted and encouraged by HURST’s endorsement of our initiative.”