What Are The Key Data Points for Comparative ESG Data?

ESG reporting is complex. Banks and issuers alike struggle with a lack of cohesive reported data, limited transparency surrounding ratings methodology / ratings reliability issues and a lack of understanding of how ESG metrics compare peer to peer. 

Why is ESG benchmarking critical? 

  • Investors – ESG data is now a cornerstone of the data needed to inform investment decisions. ESG Benchmarking data provides investors with an opportunity to assess risks and opportunities of a given company, deliver a realistic comparison on a topic by topic basis to others in the same peer group . Ultimately, with simplified and organised ESG analytics, investors can simply and quickly assess the ESG profile of both the target corporate and its peers. 
  • Companies – for the issuer, ESG Benchmarking data is critical to deliver a successful sustainable business. With simple well organised comparative tools, the issuer can achieve a direct comparison against industry averages as well as specific competitors in their space. Strengths and weaknesses can be identified, informing a roadmap to refining an ESG strategy across their business functions. By understanding their industry best practices, the issuer will understand relevant social trends and ESG matters that are important to their clients, stakeholders, and potential investors.

What ESG content is needed? 

Identifying the ESG risk demands both quantitative and qualitative indicators including: 

  1. Key quantitative ESG metrics – the cornerstone of ESG reporting, includes indicators such as Scope 1, 2 and 3 GHG emissions, Water Consumption etc. It allows the direct assessment of the overall ESG Performance of the company independently or in comparison to their peers.
  2. Qualitative ESG indicators – critical to provide the full 360’ view of a corporate’s performance, the qualitative information includes non-numerical indicators that relate to company goals, initiatives and policies.  These can range from how firms plan to reduce their emissions, how they are supporting diversity and equality in the workplace, or how aligned they are with the United Nations’ Sustainable Development Goals (SDGs).
  3. Commitments, targets and initiatives –  providing a snapshot of the company’s sustainable future and details the strength and proactiveness of its leadership. Metrics include Net Zero Commitments, alignment with international principles (Paris Agreement etc.), SDG contributions and targets as well as various other ESG initiatives.
  4. Proprietary ESG information – based on publicly available information from official sources and enables comparative analysis – includes energy consumption per million of revenue or Scope 1 GHG emissions per tonne of product sold.
  5. Sector-specific information –  Sector-specific metrics provided by the issuer company to eliminate bias that can lead to false assessment. Different economic activities have different sustainability impacts – namely, each industry has its key topics of concern and the breadth of their ESG reporting reflects that. The mining sector, for example, poses greater risks to worker health and safety than other sectors (like banking), therefore metrics surrounding injuries and safety training hours etc. are crucial when assessing their efforts in the ESG space.

This specialised and complex information can be confusing, and is often misleading in the investment decision process. Currently, much of the ESG data available varies considerably in quantity, quality and relevance. At ESGdatapoint we have created simplified, digestible but robust specific and comparative metrics that can be tailored to the investors’ needs and demands.

Issues surrounding ESG data affect everyone – from customer to CEO, from pension fund to analyst. Existing data is complex, both in content and delivery. Clearly structured ESG data delivered simply and effectively through an industry leading deal management platform like DealPro delivers valuable, easily digestible, and actionable data for issuers and corporates. 

For more information about ESGdatapoint, contact Jay Gandhi or info@esgdatapoint.com

For more information about the partnership and delivery of ESG metrics through DealPro, contact Sotiris Manderis or info@fin-smart.co 

The Finsmart Team