Blog Post

ESG - Integration strategy, sustainable finance and communication

MACK BHATIA

Communicating your strategy to ESG focused investors is a key component of ESG integration. With Environmental, Social and Governance (ESG) investing now a mainstream feature for investors - companies, issuers and banks are making changes to show ESG improvements and sustainable finance initiatives.


Introductory note

Environmental, Social and Governance criteria – and is seen as core to the way today's responsible businesses operate. Largest opportunities lie in the way we bring sustainability in our financial and company strategies. 

The biggest mutual funds and asset managers are paying closer attention to engagement on environmental and social issues in their portfolios as they bear directly on financial performance. If you have ever wondered how mainstream ESG has become among institutional investors, corporates and banks – have a quick look at the hbr article.

To engage investors, corporates should showcase a better understanding of the investors’ needs for ESG information and how to improve the company’s ESG investor communications.

What is Sustainability or ESG communication?

Sustainability communication is an approach to engage your customers and investors to showcase your progress on sustainability commitments. It is understood to have a positive influence on the shareholder value. 

As our team of sustainability experts say, “Sustainability communication is the process to relay and present any strategic or operational activities that companies or organizations undertake in alignment with their transition towards a sustainable company or an organization.”

How do you communicate the strategy to ESG-focused investors?

Digital First Communications and a user-centered approach aligns with investor expectations of an easy access to information. On the contrary, the focus of communications on the investor needs boosts the effectiveness of digital communications. Development and implementation of strategies for online and offline content to engage your investors makes communication extremely effective and to the point.

The recipe of excellent investor communication contains relevant content which gives value to the investors. Investors should feel confident about the sustainability progress. This should be supported by materials and some proof to showcase a degree of a positive financial impact of ESG efforts. In an ideal scenario, a statement such as “we see customers driven to our products due to our sustainability efforts are foreseen to have an impact in our revenues…” should make investors confident. Although, there should also be an effort ensure that such statements are backed by robust evidence that investors clamor for. Talk to us about our solutions that can help companies measure sustainability performance.

Germany’s Bayer, Itali’s Eni, Switzerland Nestle and Anglo Dutch Unilever are good examples of how they combine their ESG progress and sustainability with “walking the walk” and executing on it.

Digital first communication with key inputs on ESG disclosures and transparency on ESG improvements makes it easy for investors to understand your sustainability profile. This in turn influences an easier access to capital for corporates. Similarly, when sustainable finance initiatives are promoted – investors become aware of the sustainable investments undertaken by companies and gives them the confidence on your ESG commitments.

The marriage between the digital first approach and sustainability is extremely effective. Create ESG communication profiles and to develop solutions that accelerates sustainability growth. 

How does Sustainable Finance and ESG communication work together?

It is interesting to see that finance and sustainability cross paths while smiling at each other but are still unsure of the best way to interact. Companies should focus on creating connections and fluency between finance and sustainability functions within the corporate organization. 

One of the ways is to communicate and create materials for easy distribution and access when a financial initiative is undertaken to fund sustainable projects within an organization. When initiatives such as a social bond issuance, as an example, are undertaken, the reasons of issuance, the projects being funded, or the use of proceeds can be creatively presented for internal alignment and to cater to inquiries by investors.

Why does this matter? Many companies (and in particular, CFOs) may not be aware of the importance of environmental and societal stewardship and how it affects investor decision-making — and ultimately reputation and stock price. Hence, communication of ESG improvements and sustainable finance becomes one of the key strategies to gain investor alignment. 

Sustainable finance communications can help improve your ESG score. Connect with us to know more.

How does theSustainability.io (teamSIO) help you to target ESG investors?

We engage with corporates and banks on a number of fronts, on the investor relations side, on the treasury side and within our capital markets function. 

On one side teamSIO manages programs to provide insights into volume flows and into the types of investors that are interested in your business, as well as gives you access to information around what institutions are thinking about and what they are interested in. On the other side, our team also creates digital and interactive ESG communication strategies and tactics to engage investors in your ESG and sustainability profile.

theSustainability.io view

With more investors actively integrating ESG into their decision-making, teamSIO Services continues to support clients on adherence to Green Bond Principles, Social Bond Principles and Sustainable Bond guidelines for sustainable investments, provide additional reporting on specific metrics and segregate capital and cash flows as required. For issuers, it means considering how to best incorporate ESG into their investor relations and financial stories. We actively work with both investors and issuers to understand their ESG priorities and help them achieve their objectives.


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