By Lindsay Patrick
Published January 26, 2021 | 1 min read
After a year of uncertainty and disrupted economies and communities around the globe, we look to 2021 optimistically. Driven by record flows in sustainable funds and sustainable debt issuance in 2020, 2021 will be the year we see the shift in ESG Leadership, driven by the corporate sector.
In this edition of Sustainability Matters, RBC Capital Markets Sustainable Finance Group highlights the three themes for the year ahead.
RBC Capital Markets’ Three ESG Themes for 2021
Companies Propelled into Action:
Global policy alignment and the expectation that the private sector play a role in addressing climate change and inequality will see a shift from investors driving the ESG agenda to the private sector leading the charge
The Rise of ESG Targets:
Ambitious, time-bound ESG targets will become the norm in 2021, helping fuel the demand and growth in sustainable finance products such as Sustainability-Linked Loans and Bonds
Sustainability Reporting Gets Rigorous:
Collaboration among sustainability standard setters will create standardization and rigor in ESG reporting, resulting in the continued growth and adoption of climate-risk reporting
For more information or to register for the RBC Capital Markets Global ESG Conference on February 25-26, 2021, please contact your RBC Representative or click here.
Head, Strategic Initiatives and ESG
Lindsay Patrick is Managing Director and Head of Strategic Initiatives and ESG at RBC Capital Markets. She leads the Sustainable Finance Group, and with her team, spearheads the provision of solutions and advice for RBC’s institutional and corporate clients across all areas of sustainable finance that incorporates both environmental and social perspectives. Lindsay is also responsible for the advancement of the RBC Capital Markets’ business strategy, supporting the firm’s overall growth and performance ambitions. Lindsay has two decades experience in investment banking, spanning trading floors across North America, Europe, Australia and Asia.
By Ivana Kottasová, CNN
Updated 0028 GMT (0828 HKT) January 20, 2020
(CNN)It’s not a boast you usually hear about an oil field: Norway says its huge new facility is great for the environment.The oil-rich nation claims the Johan Sverdrup field, which was opened with pomp by the Prime Minister last week, is helping to “reduce emissions” because it is completely powered by renewable energy.”Johan Sverdrup is now open. That’s good news for our investors, for Norway — and for emissions,” boasts the official website of Equinor, the Norwegian state company that operates the field.Its critics, however, see Norway’s third-biggest oil field ever as a perfect symbol of the Scandinavian country’s climate hypocrisy.The field, located around 87 miles off the Norwegian coast, is named after the country’s first prime minister. It has reserves of 2.7 billion barrels of oil, enough to last half a century and bring more than $100 billion into Norway’s pocket.The operation is powered by energy brought from the shore, generated mainly from hydroelectric power — a rarity for offshore oil fields, most of which are powered by diesel generators.
For the first time ever, electric cars outsold gas and diesel vehicles in NorwayIt is a fitting example of Norway’s approach to climate change. The country was among the first to ratify the Paris Agreement and has pledged to become climate neutral by 2030. It offers its citizens generous subsidies for electric cars and has banned deforestation.close dialog
Johan Sverdrup is the third largest oil field on the Norwegian continental shelf.On top of its significant fossil fuel reserves, Norway also has abundant renewable energy resources, particularly in hydropower. It covers its domestic needs with clean energy and sells most of its oil and gas abroad.Equinor, the Norwegian state company that operates the Johan Sverdrup field, is working hard to highlight the field’s efficiency. “Average CO2 emissions from international fields are 25 times higher, (with) 18 kg CO2 emitted per barrel produced versus 0.67 kg CO2 emitted per barrel produced from Sverdrup,” Equinor spokesman Morten Eek told CNN.
Johan Sverdrup oil field
But Paarup Michelsen said this saving is not significant when considering the bigger picture, because emissions from production account for only 5% of total emissions from the global oil industry.”The big problem is the combustion, in sectors like transport and industry,” he said.As Mark van Baal, founder of climate pressure group Follow This, put it: “An oil company with targets for its own emissions, and not for its products is like a cigarette producer that promises that all employees will quit smoking, while increasing cigarette production.”
Who is responsible?
The Norwegian government can claim it is doing all it can to combat climate change, because current international rules place the responsibility for greenhouse gas emissions on the country where they occur.For Norway, this means that it is not responsible for the emissions caused by the burning of its oil in other places around the world.According to figures from Norway’s statistical office, the country’s annual domestic greenhouse gas emissions reached around 53 million tons in 2017. That comes to roughly 10 tons per person, which is roughly in line with the rest of Europe. Emissions in the US stood at 15 tons per person in 2017, according to the International Energy Agency.The emissions generated by Norway’s exports, however, are of a very different magnitude.According to the United Nations’ Emission Gap Report, emissions from the oil and gas Norway sold abroad reached roughly 470 million tons in 2017.When the Norwegian government talks about reducing emissions, it means domestic emissions, not from its exports. But the Paris Agreement on climate is clear. To avoid catastrophic global warming, the world has to dramatically cut all carbon emissions.Experts say that phasing out fossil fuels is essential if global warming is to stay below a rise of 2 degrees Celsius above pre-industrial levels by the end of the century, the goal set by the Paris agreement.Norway’s Minister of Climate and Environment Ola Elvestuen acknowledged that his country will need to change its ways in the future.”The world needs to reduce its use of fossil fuel as fast as possible, and of course this will affect both the Norwegian economy and petroleum sector,” he said in a statement emailed to CNN.Yet despite its climate commitments, Norway’s government policy is also aimed at luring global oil giants to try to find and recover more oil in its territory. Under current laws, companies can deduct 78% of their exploration costs from their taxable income.The strategy is working. According to the Norwegian Ministry of Petroleum and Energy, activity in the oil and gas industry is rising rapidly.In 2019, Norway awarded 83 production licenses, a new record, and started 57 new exploration wells.The Norwegian government is not making any secret of the fact that it has long-term plans for the oil industry.The Johan Sverdrup field operation is scheduled to run until 2070 — 20 years after global emissions must be zero, according to a pledge signed by Norway’s government.Elvestuen said that while the new field might be active for a long time, two-thirds of the resources there are projected to be recovered before 2030. After that, production is expected to decline.”An expression often used by the largest parties in Norway is that the person who will ‘switch the light off’ on (oil production on) the Norwegian shelf has not yet been born,” said Paarup Michelsen.
January 7, 2021 By Celtra
Illustration: Tereza Prepadnik
With content consumption on the rise, marketers are racing to take advantage of it. Although the chase brings excitement and newfound discovery, it requires a great amount of time and effort. From exploring new ways to target audiences to keeping up with growing shopper demands, it can be difficult for marketers to sustain brand growth. That’s why we decided to take a closer look at the creative challenges that marketers face today.
Celtra conducted a survey with Regina Corso Consulting in Q4 2020, targeting 250 US-based marketing professionals director-level and up at a brand with at least 250 employees. This survey explored the creative issues marketers are experiencing at the moment and what to do about it. Let’s dive in.
Designers need more time
Creativity doesn’t just happen overnight. It takes time to fully work through the creative ideation process in order to find the hidden gems that make it to production. When your team has time to thoroughly develop their ideas, creativity can flow freely. That’s why almost nine in ten marketers (86%) say that their creative team needs more time to devote to the creative process. Time constraints add an additional layer of stress that can stunt overall creativity and negatively impact brand marketing.
A disconnect between consumer expectations and creative content
Sometimes the most damaging issues are the ones hidden right under our noses. As marketers, we know how important it is to research and understand our target audiences. Unfortunately, there is a quiet pitfall fracturing the consumer-brand relationship. During our study, we found that one-third of marketers (34%) say that high-quality design and/or layout is what first catches the customer’s eye, while 29% say an entertaining story and/or message is what grabs their attention. If we know that customers want to see exciting creativity, then why are marketers reporting a lack of creativity in the digital advertising world? We found that the majority of marketers (69%) say, when they see creative assets from brands, such as ads, promotions, and social media, that they find them to be repetitive, and almost two-thirds (63%) say very few brands are doing creative ads right now. This disconnect between the creative content that brands are producing and the creative that marketers know customers want to see ultimately creates a rift in the consumer-brand relationship.
Production pains and how to solve them
Shoppers grow tired of seeing the same ads over and over again. To avoid inundating them with repetitive designs, marketers need to find new creative strategies to optimize their campaigns. One effective method is to create a variety of different storytelling approaches so that audiences experience a wide variety of content. In fact, 92% of marketers say that their teams use this method. However, with increasing content demands and limited means of manual production, it becomes challenging for creative teams to keep up with producing content variety at scale. That’s why so many teams are turning to automation solutions. We found that the vast majority of marketers (88%) say that their creative teams leverage automation tools to streamline creative development. Different automation software have varying ranges of capabilities, which typically means that marketers have to compromise on their needs. Thanks to Celtra, now they don’t have to.
Celtra’s Creative Automation is the one comprehensive solution that makes it easier than ever for marketers to conquer these creative challenges. It cuts down production time by streamlining the entire process from start to finish, from content scaling to review and distribution. This means marketers can quickly and efficiently scale creative variety so that they can boost their marketing plans and experiment with various creative strategies.
Here are the survey highlights in a nutshell
- Creativity doesn’t happen overnight: 86% of marketers say their creative team needs more time to devote to the creative process.
- 92% of marketers use a variety of storytelling approaches so customers do not see the same ad and/or creative over and over.
- Creativity is suffering: 69% of marketers say that creative assets from brands, such as ads, promotions, and social media, are repetitive and 63% say very few brands are doing creative ads right now.
- Automation for the win: 88% of marketers say their creative team leverages automation tools to streamline their creative development.
- Creative variety is the main priority for 34% of marketers, followed by production efficiency (32%), faster time to market (18%), and improvise remote collaboration (16%).
- Eye-catching design wins: 34% say that high-quality design and/or layout is what first grabs shoppers’ attention, followed by an entertaining story or message (29%), brand recognizability (26%), and a lucrative offer (10%).
- Memorable messaging is key: Almost all marketers (97%) say an interesting story and/or message is what makes brand creative memorable
- Marketers want shopper engagement: 73% of marketers use Facebook and/or Instagram the most to engage with their customers, followed by email (55%), Twitter (35%), TikTok (12%), and Snapchat (8%).
Palm oil is a dirty word for many environmentalists. Thousands of acres of forest, and the carbon-dense peat soils beneath, have gone up in flames, clearing the way for rows of oil palm trees. For decades, governments of Southeast Asia gave agricultural companies the rights to develop vast swathes of forest, and those companies turned wilderness into plantations as fast as they could.
That was the depressing story since the 1990s, but things have recently changed for the better. In areas dominated by the palm-oil industry, deforestation has plummeted. Plantation owners used to burn and cut an area the size of Yosemite National Park every year, but they leveled less than a fifth of that in 2020, according to the latest analysis by the supply-chain watching nonprofit, Chain Reaction Research. And this isn’t just a statistical blip. “This is the fourth straight year that palm-oil deforestation has been at a fraction of historic levels, and trending down,” said Glenn Hurowitz, CEO of the environmental nonprofit, Mighty Earth.
The news on deforestation around the rest of the world is not so encouraging. Forest loss has only accelerated since the 2014 United Nations climate summit, when a collection of multinational food companies and governments committed to stop it entirely. In the past four years, as the situation has improved in Southeast Asia, it has gotten worse in Brazil and other parts of South America as ranchers and land speculators convert forests into cattle pastures. It can feel like an impossibly big problem, but by zeroing in on the bright spots, you can get a glimpse into what it might take to stop runaway deforestation altogether.
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These days, Indonesia is looking like one of those bright spots. In 2011, the government of Susilo Bambang Yudhoyono announced that it would stop handing out forest land for palm oil plantations. Suppliers would just have to make do with existing concessions. The move soon seemed woefully inadequate, as Indonesian forests fell faster than ever. But that policy change reverberated with the titans of the palm-oil industry, IOI Group, Cargill, and the biggest of them all, Singapore-based Wilmar International.
“Palm oil is controlled by just a few giant companies, and so those companies are able to exert pressure on all the businesses they buy from,” said Haseeb Bakhtary, who researches deforestation for the nonprofit Climate Focus.
Wilmar’s CEO Kuok Khoon Hong, was beginning to see that he might have the power to tip the entire industry toward saving, rather than felling, forests. The disastrous consequences of palm-oil development had become impossible to ignore: Singapore was choking on the smoke of burning forests, news reports were filled with images of stricken orangutans, and environmental groups were leading increasingly successful campaigns against companies that used palm oil in their products Over two tense days at the end of 2013, Hong, Hurowitz and other leaders hammered out a commitment (Grist has the tick tock on how that happened, here). By the end of 2014, every other major palm oil trader had done the same, telling their palm oil suppliers that those plantation owners who wiped out more forests would no longer have anywhere to sell their oil.
Still, deforestation in Indonesia kept rising. Forest fires flared and palm oil companies kept clearing land.
“We had hoped that the big companies would do their own monitoring and enforcement, but we found that companies like Korindo Group were able to clear 10,000 hectares and get away with it,” Hurowitz said. And so activists began guarding the forests themselves, using satellite imagery provided by Global Forest Watch, the online forest-monitoring program, and others. Mighty Earth, or another watchdog, wil now alert big palm-oil buyers and prompt a crackdown.
“If a supplier cuts down even a few hectares they will hear about it,” Hurowitz said. “Lately we have been struggling to find any major instances of deforestation.”
When big businesses — instead of fighting environmental protections — turn around and start backing environmental reforms, like Wilmar did, it makes it easier for governments to take more action. Indonesia has stepped up its efforts to stop forests from burning, and made its moratorium on palm-oil concessions permanent, said Liz Goldman who researches forest conversion at the World Resources Institute, a global research organization.
That’s the good news, but it’s only half the story. Spin the globe from Indonesia to Brazil, and you’ll find stark differences. There too, companies — many of them the same ones that clamped down on the palm oil trade — have made commitments to stop deforestation. But Brazil’s president, Jair Bolsonaro, seems to love wiping out forests, and only has acted to control forest burning under pressure from investors and other countries.
In Brazil, the big international traders have control over the soybean market, and their efforts to stop the conversion of the Brazilian Amazon into soy fields has been largely successful. But in parts of Brazil outside the Amazon, companies have been unwilling to back up their pledges by punishing their suppliers. And even if these corporations took strong action, that wouldn’t halt deforestation: Most of the forest cut down in Brazil turns into cattle pasture, and international companies only buy about 15 percent of Brazilian beef. It would take the coordination of domestic Brazilian businesses and a government that actually wants to halt deforestation to reverse the surge of Brazilian forest loss.
To be sure, there’s more to this story than the alignment of big businesses and governments. Basic economics also play a role: Palm oil plantations expanded fastest when palm oil prices were highest, so lower prices have translated into a drop in deforestation. The same basic economics work in Brazil, too. People can influence prices by choosing what they eat, Bakhtary said. If there’s less demand for beef, for instance, prices for cattle will fall, and ranchers won’t reap rewards for carving new pastures out of the wilderness.
Perhaps the economic slowdown and the pandemic also helped to keep Indonesian forests standing in 2020. Still, the last four years in Indonesia looks to Hurowitz like solid evidence that forest protectors have finally cracked the code: When governments and big businesses start backing up their words with deeds, and punishing those that break the rules, they might stop forests from falling.
Correction: A previous version of this story attributed a statement to the wrong researcher at the World Resources Institute.
FEBRUARY 25, 2021|STEEL
The first of its kind, a global framework to call upon policymakers to decarbonize their heavy industries as part of COVID-19 economic recovery plans has been released today. The following civil society groups and major industrial businesses have endorsed the Framework Principles for Global Heavy Industrial Decarbonization:
Alliance for Energy Efficienct Economy (India), Aldersgate Group (EU), Architecture 2030 (US), Carbon Leadership Forum (North America), Clean Energy Canada, Corporate Leaders Group (EU) , Envision (China), Global Efficiency Intelligence (US), Global Energy Monitor (US/Global), Godrej Industries(India) , United Nations High Level Champions, Jinko Solar (China), JSW Energy (India), JSW Cement, LanzaTech (US) , Mahindra Group (India), Solutions for Our Climate (South Korea) and Tata Steel (India).
By officially endorsing the framework, these influential actors are coming together across sectors to call out the urgent need to accelerate and scale-up the decarbonization of heavy industry to align with the goals of the Paris Agreement, including the need to limit warming to 1.5°C.
Established by international non-profit the Climate Group and campaign organisation Mighty Earth, The Global Framework Principles for the Decarbonization of Heavy Industry has been developed in close coordination with industry experts. It’s the first time a set of publicly available global guide rails has provided clear steps for how heavy industries like steel, cement, and chemicals across the world can stimulate economic growth while aligning with a 1.5°C climate trajectory.
The framework sets out six core principles, each of which represent an essential lever that policymakers can use to ensure the successful decarbonization of steel, cement, chemicals and other heavy industries. These include tying heavy industry public financing to emissions reduction plans, and prioritising investment in low- and zero-carbon technologies that will help phase out fossil fuel use in industrial processes.
Jenny Chu, Head of Energy Productivity Initiatives at the Climate Group said: “In the wake of COVID-19, we have a critical window to reinvent and reimagine our global industrial economy for the better. Time is of the essence to adopt this framework and to avoid locking in inefficient, high-emitting industrial capital. Global leaders need to urgently put these principles into action while collaborating and coordinating efforts to ensure industry moves as a whole, creating a race to the top for a sustainable, just, and healthy industrial future.”
Margaret Hansbrough, Mighty Earth campaign director, said: “The last few months we have seen an unexpected cascade of net zero and carbon neutral commitments from steel, cement, and other heavy industry companies. With this framework, these companies and civil society groups are sending a very loud and clear signal to policymakers around the world, they are ready to get to work immediately on serious and collaborative policy measures to keep our planet from heating beyond 1.5C and fulfil those climate commitments with unprecedented urgency and action. Let’s get to work.”
Nigel Topping, COP26 High Level Champion and Gonzalo Munoz, COP25 High Level Champion said: “We welcome this policy framework, which is a powerful tool to raise ambition and inject urgency at the exact moment when industrial economies around the world are trying to recover the livelihoods of millions, prevent more needless deaths from the pandemic, and fight the climate emergency we are all living in.”
Prashant Jain, JMD & CEO, JSW Energy said: “We are happy to support the Global Framework Principles on Heavy Industry initiative. Industrial emissions account for nearly a third of global greenhouse gas emissions, which means this is a critical area to focus decarbonization efforts to help limit global warming to 1.5°C.AtJSWEnergywehave committed ourselves towards carbon neutrality by 2050 and setting science based targets as per the Science BasedTarget initiative.”
Dr. Jennifer Holmgren, CEO, LanzaTech, Inc. said: “LanzaTech is an innovative US-headquartered company that sits at the nexus of hard-to-abate sectors from heavy industry to aviation creating carbon recycling solutions, creating and retaining good paying jobs. It is imperative that businesses like ours use our expertise and our voice to call for the most effective climate policy in countries around our interconnected world so that we can keep our planet habitable. We are thrilled to join this effort of companies and civil society around the world setting out a clear policy framework for heavy industry decarbonization and are eager to get to work with the Biden-Harris Administration and other global leaders on this critical front in the climate fight”
Heavy industry uses about a third of all energy and accounts for roughly a quarter of all global greenhouse gas emissions, which makes this a critical area to focus decarbonization efforts. However, political leaders have yet to lock in a low carbon recovery for their heavy industries or even make it a top climate policy priority. In the coming months, as Europe, China, Japan, Korea, India, and North America deliberate on recovery and climate policies, the Climate Group, Mighty Earth and their allies will be calling on political and business leaders to embrace this global framework.
About Mighty Earth
Mighty Earth is a global environmental campaign organization that works to protect forests, conserve oceans, and address climate change. We work in Southeast Asia, Latin America, Africa, and North America to drive large-scale action towards environmentally responsible agriculture that protects native ecosystems, wildlife, and water, and respects local community rights. Mighty Earth’s team has played a decisive role in persuading the world’s largest food and agriculture companies to dramatically improve their environmental and social policies and practices. More information on Mighty Earth can be found at www.mightyearth.org/.
About the Climate Group
The Climate Group drives climate action. Fast. Our goal is a world of net zero carbon emissions by 2050, with greater prosperity for all. We focus on systems with the highest emissions and where our networks have the greatest opportunity to drive change. We do this by building large and influential networks and holding organisations accountable, turning their commitments into action. We share what we achieve together to show more organisations what they could do. We are an international non-profit organisation, founded in 2004, with offices in London, New Delhi and New York. We are proud to be part of the We Mean Business coalition. Follow us on Twitter @ClimateGroup.
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A call to action is to develop all levels of sustainable educational programs
Achieving a circular economy for a sustainable, healthier planet.
PANELTECH.US’s call to action is to develop all levels of sustainable educational programs. Reuse and develop green products to support a circular economy.LAUSANNE, VAUD, SWITZERLAND, February 24, 2021 /EINPresswire.com/ — Our living environment is in crisis. Millions of people worldwide are already experiencing the damaging effects of climate change, pollution, rising sea levels, and natural disasters. The impacts of plastic and agricultural waste are particularly detrimental to our living environment.
Fortunately, there’s a growing network of young people, educators, and supporters that are passionate about making our environment greener. “For young people, the climate crisis is one of the defining challenges of their age,” said Kumi Naidoo, Secretary-General of Amnesty International. On behalf of Amnesty International, Ipsos Mori questioned more than 10,000 people from 22 countries aged 18-25 (Gen Z). Respondents cited global warming as “the most important environmental issue facing the world (57%).”
“This is a wake-up call to world leaders that they must take far more decisive action to tackle the climate emergency or risk betraying younger generations further,” said Kumi Naidoo. We only have a limited time to act to stave off the worst effects of climate change.
Jelanna Morgan, founder, AthLEDA Foundation, a nonprofit organization providing mentors, upskilling, and jobs placement for diverse, underrepresented, first-generation, high-performers stated: “We’re seeing more demand for knowledgeable talent from our corporate partners within the green industry … We need the next generation (Gen Z) to stand with us as emerging leaders … to solve real-world problems as we revolutionize our world together through social sustainability and green technologies.”
An Early introduction to sustainable education that innovates, inspires, and encourages leadership will increase sustainability literacy. A genuinely relevant, innovative, and comprehensive system can only be achieved by working together with governments, industry, researchers, and educators. Only then will we develop the infrastructure required to enable students’ learning opportunities at all stages of their education and, ultimately, their careers. Research projects directly influence families’ behavior towards consumption, recycling, green-buying and allow consumers to actively drive constructive change, benefitting communities, the economy, and the planet. They will integrate strategies and sustainability plans to become an influential force aligning with the UN SDGs to achieve a sustainable future.
Our efforts, in conjunction with business and bio-tech, can create revolutionary bio-solutions. These solutions can solve today’s critical environmental challenges while establishing an ecosystem of responsible consumption and production, bringing effective green solutions to global distribution channels and brands. Through research, development, the production of sustainable consumer products, and advanced innovations in the green global procurement supply chain, along with establishing much needed effective governance and collaborative partnerships across multiple industries and entities, our efforts will lead to consistent sustainability and decreased consumer waste, if we genuinely motivate consumers to engage and incentivized them to buy green products.
Leiven Tsai, CEO, PANELTECH.US articulated such a process saying, “Circular economy principles will help the environmental impact of consumer waste. PANELTECH.US is a bio-solutions company in pursuit of environmental justice with patented technologies that work together to successfully re-engineer various forms of bio-waste and plastic waste into biodegradable plastics and other green materials that are sustainable and affordable. This reduces petroleum-based plastics created, while simultaneously repurposing waste and using it to produce green consumer products, all of which align with consumer, corporate, and government CSR and ESG initiatives. It’s going to take large-scale multi-stakeholder collaborations throughout the global value chain to develop new norms to support a circular economy.”
Our call to action is to develop all levels of sustainable educational programs. Reuse and develop green products throughout the supply chain to support a circular economy. Our governments, businesses, global partners, and educational systems need to unite around these initiatives to achieve a circular economy for a sustainable, healthier planet.
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PANELTECH.US’s Call to Action : Green Education Leads to Social Responsibility & Green-Buying
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Uncovering the relationship between ESG and financial performance through meta-analysis of 1,000+ studies
Meta-studies examining the relationship between environmental, social, and governance (ESG) and financial performance have a decades-long history. Almost all the articles they cover, however, were written before 2015. Those analyses found positive correlations between ESG performance and operational efficiencies, stock performance and lower cost of capital. Five years later, we have seen exponential growth in ESG and impact investing – due in large part to increasing evidence that business strategy focused on material ESG issues is synonymous with high-quality management teams and improved returns.
In collaboration with Rockefeller Asset Management and Casey Clark, CFA (MBA ’17), the NYU Stern Center for Sustainable Business examine the relationship between ESG and financial performance in more than 1,000 research papers from 2015 – 2020.
About the Research Methods
Because of the varying research frameworks, metrics and definitions, we decided to take a different approach than previous meta-analyses. We divided the articles into those focused on corporate financial performance (e.g. operating metrics such as ROE or ROA or stock performance for a company or group of companies) and those focused on investment performance (from the perspective of an investor, generally measures of alpha or metrics such as the Sharpe ratio on a portfolio of stocks), to determine if there was a difference in the findings. We also separately reviewed papers and articles focused on low carbon strategies tied to financial performance in order to understand financial performance implications through the lens of a single thematic issue.
1. Improved financial performance due to ESG becomes more noticeable over longer time horizons
We found that our proxy for an implied long-term relationship had a coefficient with a positive sign that is statistically significant. The model suggests that, everything else being constant, a study with an implied long-term focus is 76% more likely to find a positive or neutral result.
2. ESG integration as an investment strategy performs better than negative screening approaches
he sample size of studies on specific portfolio management strategies and asset classes was small, making it challenging to interpret how they would translate into decision-making for an asset manager. The dominant research approach was to find a sample of sustainable funds or indices and compare them to a conventional benchmark.
3. ESG investing provides downside protection, especially during a social or economic crisis
ESG investing appears to provide asymmetric benefits. Investor studies, in particular, seem to demonstrate a strong correlation between lower risk related to sustainability and better financial performance. Recent events have provided unique datasets for researchers.
4. Sustainability initiatives at corporations appear to drive better financial performance due to mediating factors such as improved risk management and more innovation
Sustainability strategies implemented at the corporate level can drive better financial performance through mediating factors—i.e. the sustainability drivers of better financial performance such as more innovation, higher operational efficiency, better risk management, and others, as defined in the Return on Sustainability Investment (ROSI) framework (Atz et al., 2019).
5. Studies indicate that managing for a low carbon future improves financial performance
Research on mitigating climate change through decarbonization strategies is fairly recent, but finds strong evidence for better financial performance for both corporates and investors.
6. ESG disclosure on its own does not drive financial performance
Just 26% of studies that focused on disclosure alone found a positive correlation with financial performance compared to 53% for performance-based ESG measures (e.g. assessing a firm’s performance on issues such as greenhouse gas emission reductions). This result holds in a regression analysis that controls for several factors simultaneously.To download the full report, click here.
Updated guidance on linking the Sustainable Development Goals with the GRI Standards
It is now even easier for organizations to communicate their efforts to support the UN Sustainable Development Goals (SDGs), by using the most widely adopted standards for sustainability reporting – the GRI Standards.
An updated version of Linking the SDGs and the GRI Standards has now published. This free resource gives a breakdown of the targets under each of the 17 SDGs and maps how they correlate against the disclosures in the GRI Standards, including the latest published versions.
The linkage document complements GRI’s wider support to help companies communicate their impacts on sustainable development. These include a suite of tools on integrating the SDGs in reporting, and SDG reporting examples from around the world.
As GRI Head of Policy, Thijs Reuten, explains:
“The GRI Standards enable companies to integrate SDGs reporting within their sustainability report and this revised guidance helps them make these connections in a clear and consistent way.
The SDGs address our world’s most pressing sustainability challenges, therefore it is crucial that the contribution of the private sector is both recognized and understood. That is why GRI continues to work with partners and reporting organizations to drive forward the transparency required to support the fulfilment of the SDGs.”
GRI thanks the Government of Sweden for supporting this project through the Swedish International Development Cooperation Agency (Sida).
A four-year Action Platform for Reporting on the SDGs, led by GRI and UN Global Compact, was successful in engaging companies and building their capacity. Next up, GRI is launching a Business Leadership Forum, to bring together companies and key stakeholders to leverage the power of corporate reporting to drive action towards accomplishing the SDGs.
Target six of SDG-12 requires all countries to encourage companies to adopt sustainable business practices and include sustainability data in their corporate reporting.