ESG Strategy – Embed ESG in your business model

ESG in private equity – grasp the opportunity

Sat, 16 Apr 2022 13:58:29 GMT

Private equity firms can embrace ESG through the lens of value creation

ESG or environmental, social or governance, practices in the private equity sector presents a valuable opportunity for private equity firms. ESG integration into private equity strategy is not to be viewed as a good PR but it should be viewed as a core business strategy through the lens of value creation for its stakeholders such as LPs, investors and communities.

Investors, portcos, communities or others impacted by equity investments are more inclined to private equity firms with authentic ESG practices. And so private equity industry is under greater scrutiny than ever before, and PE firms must do a better job of capturing and tracking the value they generate and the impact of their activities.

It's a domino effect

Most private equity investments stem from institutional investors or from capital commitments from other external financial institutions (limited partners). Other contributions to private equity firms comes from accredited investors for funds, or large endowments.

In the current environment, most of the financial institutions, investors or endowments have their own ESG commitments, and they are likely to focus on private equity firms with similar goals or aligned ESG practices. This is imperative for investors and limited partners as they may be (or rather will be) subjected to audits and regulatory compliance where they need to show the flow of funds to ESG driven projects.

Moreover, limited partners want to offer clear ESG communications to stakeholders and so have a desire to choose investments that make a positive contribution.

Henceforth, private equity firms are required to have an ESG strategy which is aligned to the limited partner’s ESG focus. The domino effect, then further pushes the portfolio companies and other private equity investments to adhere to ESG standards which, by now, would be at the core of the value chain.

ESG opportunities and value generation

There are many ways private equity firms can bring in ESG bring into their business mix or business model. The key, however, is to choose a path that will generate maximum value for the investors while they get aligned to the ESG practices.

ESG in existing investments : ESG opportunities, particularly environment friendly opportunities exist in every business. Private equity firms can influence the portfolio companies to follow ESG practices or identify new environment friendly opportunities in the existing business model. See here how business can embed ESG in their business model.

Impact funds: There could be various reasons a private equity firm may not be able to transition to ESG focused practices. These reasons such as limitations to the existing fund structure, business limitations of portfolio companies, etc. In this case, development of a new fund such as an Impact fund could be a great opportunity. Impact funds are created to capitalize on investments made with intention to generate positive, measurable social and environmental impact alongside a financial return (See example here). This allows private equity firms to formulate an ESG focused investment model, without disrupting immediate business.

Hybrid approach : A hybrid approach allows the private equity firms to continue working with existing portcos while they continue to identify new opportunities, particularly through a new fund or Impact fund strategies. A hybrid approach can send a very strong signal to LPs and stakeholders on private equity firm’s commitment to ESG practices, however it can also present strategic and resource challenges on the way.

ESG opportunities and value generation

Private equity firms have commitments on investment returns, and hence it may not be that simple to align with ESG standards or embed environmentally friendly investments, particularly with the already and current investment structure or portfolio companies.

Although challenges remain to accurately monitor and measure ESG, a thoughtful approach to ESG integration is becoming a must-have for LPs and GPs—so much so that future deals and investments could be jeopardized if such considerations are absent. LPs and GPs can take advantage of a growing number of tools and options as they plan concrete strategies, set priorities, balance environmental and DEI initiatives, and conduct ongoing evaluations to monitor ESG progress

There are strategic ways to overcome these challenges, particularly through stakeholder engagement along the value chain, both upstream (LPs) and downstream (portcos). Connect with us to know more on how we can work with you.

How can we help

theSustainability.io (TSIO) is a growth company that delivers Sustainability and ESG Solutions to corporations, companies, and investment firms.

Combining a unique expertise in technology, data and an in-depth knowledge of an ESG ecosystem, the technology solutions and services deliver on transparency, trust and reliability between corporations and investors, primarily to aid the flow of capital to corporate and companies ESG initiatives while showcasing business value to sustainable investors.

Reach out to us for any ESG related query or learn about SIOChain – a unique platform developed by theSustainability.io to enable supply chain sustainability . For any questions, comments or enquiries, please connect with us at theSustainability.io contact us page.

Supply Chain Sustainability - an imperative for your ESG strategy

Thu, 27 Jan 2022 18:45:35 GMT

Manage your ESG risks with SIOChain - Supply chain sustainability management system

Supply chain sustainability is a key component of your ESG strategy. Through supplier engagement, supplier recognition, and sustainable procurement, you can continue to improve your business practices and operations to manage risk while increasing productivity and efficiency within the supply chain. By working closely with suppliers, companies can manage their environmental and social impact and position themselves for stronger growth.

Pressure to support sustainability in supply chains is coming from multiple sources, including investors, government, and international bodies; with all of them also being the key drivers pushing companies to embed ESG focused business models and encourage ESG transparency and disclosures.

Executives are the most significant sources of pressure behind corporate commitments to supply chain sustainability across all issue areas; and supplier development, supply chain visibility, and environmental impact reduction are the three most common ways companies are putting their supply chain sustainability promises into practice.

Why is supply chain sustainability important for your business?

Among many reasons, the most important reason is that your ESG strategy and sustainability commitments, beyond your operations, are heavily dependent on your supplier or value chain network. In order to make your ESG strategy successful, it is imperative to engage your suppliers so all can adhere to the sustainability standards.

The second most important reason is to gather data aligned with your ESG metrics. When tracking supply chain sustainability standards, most companies start with data collection. This provides a strong picture of how contractors and suppliers are performing today and allows you to set goals to improve or set up baseline metrics. These metrics and data also contribute to your overall ESG goals or metrics so you can confidently disclose or report on your ESG progress

The third reason is, Investors and stakeholders are concerned about your supply chain sustainability practices and want to ensure that there aren’t any significant material risks associated with your value chain or which can hamper your operations or financials. SASB material map – highlights Supply chain sustainability as one of the key factors with a potential material impact ( see here ). And so, there is high pressure on executives to support supply chain sustainability (SCS).

Align with your ESG strategy

Your ESG strategy is a guideline to supply chain sustainability and gauging a supply chain's ESG performance level would be relative to the organization's needs within environmental, social, and governance (ESG) activities. Aligning your supply chain strategy with your ESG objectives shares the following benefits:

Manage Reputation Risks: Getting insights into your supply chain sustainability is crucial as many companies are required to meet regulatory needs in the areas of operations. Tracking environmental and social parameters along the supply chain network helps mitigate reputation risks.

Environmental Data and ESG Metrics: Gathering data from your supplier network is mandatory to get baseline metrics to improve upon. Government regulations, international bodies, and even investors expect proof that your supply chain network is not a material risk. Engaging your supply chain network also sends a strong signal to all your stakeholders on positive ESG progress.

Showcase Clean Revenues: Your stakeholders, including the end consumer, wants to know that your revenues are coming from clean sources and not from unethical practices. ESG disclosure frameworks mandate reporting on ESG metrics through your value chain, a lack of which may be a risk to access to capital.

Align with your ESG strategy

SIOChain is a technology platform that encourages collaboration among you and your supplier network on sustainability and ESG standards and their adherence.

At its core it solves challenges faced by many (almost all) companies where the ESG teams or supply chain teams do not have the mechanism, tools, or capacity to engage, collaborate or collect data as needed to meet ESG commitments, this is in the middle of ever-increasing executive and investor pressure.

SIOChain also provides a supplier scoring framework so you can identify the most sustainable suppliers, share incentives, and vice versa. There is also a fantastic opportunity for you to access a network of green suppliers as they continue to join the SIOChain network.

We encourage you to have a chat with our team and see how SIOChain, a robust supply chain sustainability management platform can work with you on your ESG success.

Your ESG consulting partners

Thu, 28 Oct 2021 11:32:24 GMT

Meet your ESG objectives and engage your investors with our team

In a remarkably short time span, Environmental, Social and Governance principles (ESG) have gained prominence among investors, from top performance-driven asset managers to institutional investors (including pension funds and sovereign wealth funds) and wealth managers. This is a response to pressure from their own investors and industry regulators to incorporate ESG-consciousness into investing mandates to address climate change and achieve more sustainable, long-term returns.

This primarily boils down to how companies and businesses incorporate ESG practices and initiatives in their business model and operations to engage investors and help them develop an environmentally friendly portfolio. This also means more access to capital for you.

Our services and how we work with you

1. ESG in your business model

Our global team of ESG professionals dives into your existing business model to identify opportunities of positive impact on the planet or the people. Our team will practice adequate due diligence to not only identify ESG opportunities but help our clients quantify potential ESG benefits and risks, incorporate ESG policies into the strategies and activities, facilitate transactions between asset buyers and sellers, and provide confidence among all parties that ESG commitments are made, and risks are managed.

Our team may also identify new opportunities as we get deeper into your business and industry, in which case we will develop a business case/plan needed to succeed.

Who Benefits: Your executive team, c-suite and it sends a strong message to institutional investors on your commitment to meet ESG objectives.

2. Cross-Functional Collaboration

Our professionals liaise cross-functionally among your company and various divisions to connect the dots and to articulate the key roles every division can play. This is important to develop a coherent ESG narrative. The primary organization functions involved are investor relations, and marketing and communications, sustainability leadership, and finance (for sustainable finance opportunities).

Our team ensures cross-functional cohesion to ensure smooth execution of ESG strategy.

Who Benefits: Internal stakeholders such as employees, sustainability leaders, operations, and executive team.

3. Strategic Marketing and Corporate Communication

Our team builds a global marketing strategy in alignment with short and long-term company ESG goals. We bring in a creative team of experts with a strong ESG background to develop and execute marketing campaigns and amplify your ESG success and increase visibility among the investor audience. We engage with marketing/communication teams to develop activities as it relates to formulated ESG objectives. We make certain a coherent internal and external set of messages and communications platform. Our team works across the organization’s division leaders to develop market materials for ESG initiatives.

Our ESG professionals will manage a wide range of copy (content strategy/marketing), including press releases, website content, social media posts, and written interviews. We nurture the development of your earned and/or paid media strategy to ensure a steady flow of positive news about your ESG progress – hence, driving an increase in national and international coverage.

Who Benefits: External stakeholders, investors, executive team, and the board.

4. Manage the company’s competitive intelligence, business, and data analytics needs

A few of our team members come from an investor background, having worked with institutional investors in the past; therefore we understand the ESG integration and ESG data needs that build upon the investor’s confidence in your ESG progress. We have data tools and a vetted data provider network to share timely ESG data with your investors or other stakeholders as and when needed. We ensure data integrity and honesty in presenting your ESG progress to all stakeholders.

We also have internal data tools (a couple also driven by Artificial Intelligence) to share recommendations for us to create, pivot or manage ESG initiatives. We can leverage these tools to timely manage risks or to gain a competitive industry advantage.

5. Reports Audit and Showcasing Impact

We have internal team members with expertise in reporting frameworks and standards such as TCFD, GRI, or SASB. Our engagement with you includes checking, auditing, and maintaining the sanctity of these reports. We ensure ESG integrity in such reports and that the presentation is clear, concise, and well understood by all stakeholders, readers and investors. Showcasing your impact remains our first priority, and we make certain that it is backed up by data to maintain your ESG integrity.

Work with us

theSustainability.io is the premier sustainability and ESG solutions provider backed by a global team of domain experts. We work with corporations, companies and governments to capture opportunities, manage risk, and drive growth in an orderly transition to sustainability.

ESG and Banks - A crucial component of an ESG ecosystem

Tue, 15 Jun 2021 21:47:59 GMT

Embedding ESG into bank's s business model - key strategies to leverage

Banks are a crucial component of an ESG ecosystem. In majority of the cases, banks and lenders drive investments and financial expertise across private and public companies. Government regulations, investor pressure and a general sentiment around climate change is pushing companies to identify opportunities and fit ESG in their business models.

Publicly traded companies, influenced by institutional investors and environmental regulations, needs to be well-positioned to ensure that they have access to capital – at the scale it is needed – to pivot and transition to a low-carbon, sustainable economy.

Privately held companies, on the other hand, can utilize ESG or sustainability opportunities to enhance their green portfolio and take advantage of various capital incentives, tax benefits or can leverage financial or debt instruments specifically made to support environmentally friendly initiatives (Example, sustainable packaging).

Banking sector can help with this transition while it builds upon their own sustainability strategies.

The intent of this article is to touch upon high level strategies that bank's can undertake to develop their ESG profiles. Note that since each of these strategies is a large topic, we do intend to poke your ESG brains and invite you to engage with us over a conversation.

How can banks pursue ESG?

There are many ways banks embed ESG into their own business strategies. However, our research states that such strategies mainly fit into the following 3 categories: Sustainable Finance, Operational Efficiencies and Responsible Investing (also known as Sustainable Investing, or ESG Investing). We will go through each of these as we touch upon these topics, with examples:

Leverage Sustainable Finance

Banking sectors enhance their lending portfolios to include ESG as a main-stream component in the sustainability strategy. Responsible lending by the banking sector and other financial institutions sends a strong signal among the corporate sector looking for capital access. One of the ways this can happen is when banks prioritize loans and other lending instruments for companies with sustainability and ESG as a strategic commitment.

As more and more companies prepare a transition to a greener business model, it becomes more than ever, and imperative, that financial institutions steer their loan portfolios accordingly; this could be easier said than done as a few banks may find it challenging to shift their investments from existing carbon intensive projects to low-carbon driven initiatives. Nonetheless, this is a necessary step that can be part of the bank’s strategic and business objectives.

Banks can leverage various sustainable finance instruments available in the market to embed ESG in their own business; this is to improve their lending portfolios and accommodate sustainable projects. Sustainable finance instruments such as Green Loans or Sustainability linked loans presents a massive opportunity. The total green issuance surpassed $265Bn USD in 2020* and shows a growing trend in 2021 and beyond. Although Sustainability Linked Loans issuance is slightly higher than the green loans, Green loans still constitute at-least 20% of the total sustainable finance issuance at the time of this article.

Other sustainable finance instruments such as Green Bonds, Social Bonds, Sustainability Linked Bonds or even Transition Bonds are tailor made debt instruments to help companies support the ESG initiatives, and banks can assist.

To know more about Sustainability Linked Loans or Green Loans, you can read more at sustainable finance or connect with us here.

Canada became the latest country to join the Green Loans market when Bank of Montreal delivered the first labeled Green Loan in Canada granting loans to Atlantic Packaging ; the aim is to finance a new 100% recycled container board facility. With this, Canada joins Europe and United States in the ever-growing sustainable lending market.

What is the difference between Sustainability Linked Loans and Green Loans? You can always connect with us here for questions like these and more.

Operational Efficiency

Environmental, social, and governance (ESG) issues are front and center for the North American’ biggest banks. A renewed focus from the US government on climate change and environmental issues has generated a wave of announcements with quite a few banks including JP Morgan, Wells Fargo, Bank of America, and Fifth Third – all unveiling measures to enhance their commitment to ESG themes.

JPMorgan Chase’s commercial banking arm has set up a new ‘Green Economy’ specialized industry team , which will provide dedicated banking services and expertise to companies that produce environmentally friendly goods and services or focus on environmental conservation.

Bank of America announced a goal of deploying and mobilizing $1 trillion by 2030 through its Environmental Business Initiative in order to accelerate the transition to a low-carbon, sustainable economy.

Meanwhile, Wells Fargo has entered into a 20-year renewable energy purchase agreement with Florida-based NextEra Energy Resources . Under the agreement, Wells Fargo will consume 100% of the solar energy produced by the Blackburn Solar Project, a 58-megawatt 600-acre solar farm planned for Catawba County, North Carolina, under Duke Energy’s Green Source Advantage (GSA) program.

There are numerous ways banks can pursue operational efficiencies to align with their own ESG strategy, therefore creating a cumulative effect through the ESG ecosystem.

Responsible Investing

Responsible investing is a strong catalyst driving an ESG ecosystem, specifically, when its driven by large institutional investors such as BlackRock ( $8.8 Trillion USD AUM, Read Larry Fink’s statement here ), Charles Schwab ( $3.25 Trillion USD AUM), T Rowe Price ( Close to 2 Trillion USD AUM, Sustainable Investing at T Rowe Price ) and more.

Total assets under management under all Sustainable and ESG ETFs crossed $15 Trillion USD in 2020 – a testament that responsible investing is a brilliant strategy that combines both; financial and environmental considerations. Contact us here to learn more about the best of ESG ETFs and more.

The wealth and asset management functions within the banks have a potential to enhance the long-term sustainable performance of the portfolios. Banks can deepen their portfolios by integrating ESG factors – both financial and non-financial, into their current or future investments, showcasing environmental stewardship while strengthening its own balance sheet.

Can sustainability and supply chain finance work together?

Supply chain finance, also referred as Reverse factoring is when a finance company, such as a bank, interposes itself between a company and its suppliers and commits to pay the company's invoices to the suppliers at an accelerated rate in exchange for a discount. The total market for supply chain finance is estimated to be $275 bn; this is according to Wikipedia’s data. But conceptually speaking, the potential market for supply chain finance encompasses every invoice and receipt issued by corporates, which could be more than $1.7 Trillion.

Can sustainability and supply chain finance work together? This remains yet to be seen but seems possible.

How can we help

theSustainability.io (TSIO) delivers Sustainability and ESG Solutions to corporations, companies, banks and investment firms.

Combining a unique expertise in technology, data and an in-depth knowledge of an ESG ecosystem, the technology solutions and services deliver on transparency, trust and reliability between corporations and investors, primarily to aid the flow of capital to ESG initiatives while showcasing business value to sustainable investors.

ESG Strategy – Embed ESG in your business model

Fri, 23 Apr 2021 01:23:52 GMT

ESG strategy - Make your business model compatible with a net-zero economy

With ESG Investing picking up pace, it is very important that companies make sustainability and ESG a central component of their business model. “We know that climate risk is investment risk. But we also believe the climate transition presents a historic investment opportunity”, says Lary Fink from BlackRock. Authoritative statements like these present an opportunity for companies to prepare their business and our economy against the greatest global threats while it opens doors for capital access.

Investors expect that companies disclose a plan for how the business model will be compatible with a net-zero economy. This presents a challenge for companies as it might require decades of effort to explore and implement opportunities within the business model. As we see, there are a few ESG strategies that companies can leverage to step into the ESG space:

Understand the existing impact (Micro Environment): This strategy is what we call as a “low hanging fruit”; a common expression that refers to those initiatives that represent relatively easy changes to demonstrate a business case for sustainability and ESG. This could be as easy as looking inside the owned operations or product categories that can be transitioned to green opportunities.

For instance, enabling operations supported by renewable energy might be an upfront cost, but could be a massive cost advantage in the long run. This is especially when the cost of renewable energy is getting lower each day. This combined by government grants and tax benefits presents great sustainability opportunity that companies can leverage. As an example, Intel leads the US Environmental Protection Agency’s (EPA) Green Power Partnership National Top 100 list, which represents the agency’s largest green power-using partners. Moreover, it is interesting to note how Intel has since embedded renewable energy strategy into its own business model .

Moreover, a move to operations driven by renewable energy may get noticed by institutional and retail investors as one of the key components of your sustainability transition, driving further interest by sustainability driven investors.

Sustainability exposure through new investments (Macro Environment): Companies can identify existing and scalable opportunities through investments in opportunities that may exist in the macro environment. A couple of former executives from a well-known company, Algonquin Power & Utilities invested in Sustainability and Societal infrastructure. The group found an opportunity with Lion Electric, a Canadian company already delivering electric vehicles in the mid-size commercial segment.

They raised near to $300 M through a Special Purpose Acquisition Vehicle (SPAC) name Northern Genesis Acquisition (or NGA) that intends to focus on opportunities making a positive contribution to sustainability through the ownership, financing, and management of societal infrastructure. Note that SPACs have gone through its ups and downs but this was one SPAC that made it through an IPO making NGA officially becoming LEV on the stock exchange .

ESG and product opportunities: Nike has made a few positive changes to its environmental practices, including introducing some new sustainable products , which primarily are made of 50% or more recycled materials per Nike. It is also a member of sustainable apparel coalition which is a good marketing strategy to support its sustainability strategy.

This is an excellent example of how companies can leverage an opportunity to identify, create and then launch product lines that aligns with their overall sustainability strategy, again, which is very attractive to the sustainable investing ecosystem. Finding similar opportunities in existing product lines or developing new product lines expands a company’s business model through good ESG and sustainability practices. Similar strategies paired with a good ESG communication initiatives is bound to be noticed by all stakeholders and investors.

Sustainability transition through acquisitions: Companies with existing operations or product categories can increase their sustainability / ESG exposure through acquisitions of companies innovating in the green sector. Companies usually invest in such companies in the beginning, followed by a full acquisition approach. This brings in a new product or an altogether new segment of offerings. This strategy aligns well with mining, manufacturing or in the energy sector.

Although Sustainability and ESG is welcomed within these sectors, it is difficult to accommodate environmental sustainability (or the ‘E’ of ESG) in the existing business model. Acquisitions of green companies is an excellent business strategy to add sustainability to expand green offerings ( and financial statements ), largely seen by investors as a positive step towards a sustainability transition. Exxaro Resources acquisition of cennergi is a good example of an acquisition strategy to bring in sustainability in the mix .

The above is few, nonetheless im portant strategies for companies to leverage in their journey to ESG and sustainability. The mentioned or other innovative ESG strategies are very attractive to governments, customers and investors; and companies can then confidently call themselves as "a sustainable company".

Supply Chain Sustainability – Activate ESG and Sustainability through the supply chain

Tue, 16 Mar 2021 23:19:53 GMT

Activate supply chain sustainability and ESG in your upstream and downstream activities

In recent years a rising number of multinational corporations have pledged to work only with suppliers that adhere to the respective Environmental and Social standards or practices. This pledge largely comes from the companies who are committed to a transition to sustainable practices, or who have ESG (environmental, social and governance) as part of their business strategy.

Many times, the sustainability commitments include working with sustainable suppliers, sustainable procurement practices, or to identify baseline metrics such as emissions, use pf plastics, waste produced through their supply chain – so they can improve upon it. This, when supply chain sustainability is essential to meet sustainability targets, or when supply chain sustainability is inseparable from ESG integration practices. However, like any new initiative, supply chain sustainability comes with certain challenges.

Current challenges and opportunities

Application of sustainable practices through the supply-chain presents certain challenges and opportunities:

Delivery on ESG commitments: when value is created for all stakeholders: Sustainable businesses are redefining the corporate ecosystem by designing models that create value for all stakeholders, including employees, shareholders, supply chains, civil society, and the planet (creating a shared value). Initiatives like supply chain sustainability can include many internal and external stakeholders. It is important to get stakeholder alignment on these new models which can delay the delivery of sustainability / ESG commitments.

Demands in the Supply Chain: Huge demands from customers to innovate supply chains and find solutions to meet strategic objectives and customer needs becomes a challenge in times when suppliers are encouraged to focus on producing more and are required to deliver on the business needs. Companies and suppliers can find opportunities to balance between production, delivery times and sustainable practices through collaboration and planning.

Risks in Supply Chain creates pressure difficult to manage: Supply chains are complex operations and at times susceptible to risks posed from political and government changes, procurement practices, information theft - to name a few. Such external forces and customer demands creates a pressure on many companies, entire industries. It can force companies to rethink and transform their global supply chain model. Hence such priorities can push supply chain sustainability on the back burner.

Creating transparency for customers: Business now look for sustainability and ESG transparency primarily driven by ESG disclosure demands from investors, and expectations from the end consumer. This is a challenging task as it requires that companies and corporation incorporate processes, install ESG measurement tools, and activate processes to gather ESG data and other tools to collaborate with all supply chain participants.

Collaboration tools to engage with customers: Supply chain participants are looking for better tools to collaborate and meet sustainability and ESG expectations. This, which should not hamper the existing process or without overloading the supply chain operational process. These tools are not very readily available, and, in many cases, companies need the support of internal technology teams to develop them. This is not a very easy task as companies and internal teams may have to prioritize the development of other tools over other priorities, which needs buy-ins, business case approvals and more.

Engaging with Tier 2's and onward: The recent study by Harvard Business Review stated that the more risks comes lower down the supply chain. Business can engage with Tier 1 suppliers as they have stronger relationships and healthier opportunities to collaborate on any new initiatives, but finds it challenging to collaborate and engage with Tier 2 suppliers and beyond.

Related : SIOChain™ can solve the above challenges. See how!

When issuers decide to issue a Green Bond or a Social Bond, the project framework must be built around the Green Bond Principles, Social Bond Principles or Sustainability Bond Guidelines. These principles and guidelines, developed by International Capital Market Association (ICMA), encourage issuer transparency and disclosure of the project's details including how the proceeds are intended to be used (use of proceeds), and the reporting process. As per the principles, the annual report should include the list and description of allocated projects and their expected impact.

Green competence in upstream and downstream operations

An important to activate supply chain sustainability is to assess green competence in the upstream and downstream operations. Challenges in supply chain management in upstream operations can creep into any part of the supply chain and create problems with ripple effects. While a focus to improve environmental, social, and governance (ESG) performance in the downstream operational areas requires hand-in-hand collaboration and trust.

Assessment, once complete can help companies identify key areas to optimize for its environmental and social impact. This can then help enable processes and design tools to get the baseline ESG metrics to improve upon. Such assessments can help emphasize how green practices can be adopted and identify operational areas with green opportunities. It can help mitigate environmental degradations from supply chain activities and increase the economic and operational performance. Hence, enablement of green supply chain can sustainable development strategy as a whole.

Expectations from suppliers on ESG initiatives

One of the important steps to activate ESG and Supply Chain sustainability is to get visibility and transparency through the supply chain. It is absolutely imperative to identify areas of biggest impacts, largest risks and to figure out opportunities for cost efficiency. To pursue this, companies do have certain expectations from the suppliers and supply chain participants, this is in alignment with their commitment to work with only those suppliers who adhere to the respective environmental and social standards. Important expectations from suppliers includes the following:

Supplier Collaboration: A collaboration with suppliers and onboard all supply chain participants such as manufacturers, distributors, suppliers and more on ESG efforts.

Supplier Compliance: To manage regulatory and industry compliance, it is expected that suppliers are compliant to industry best practices and that they adhere to Sustainability Standards set by companies they work with.

Traceability and visibility: It are expected that suppliers join their customers to enable visibility and transparency in their operations – through processes or using tools and technology. Real-time traceability, for example, can help remove any bottlenecks through the delivery chain.

Sustainability / ESG Visibility: In order to showcase ESG progress to investors and customers, it is important to prioritize ESG in the supply chain so the company can meet their environmental targets.

Opportunities for corporations and companies with sustainable suppliers

Supply chain sustainability comes with many opportunities and brings material benefits, including a positive impact on the financial statements:

Clean Revenues: Supply chain sustainability can contribute to clean revenues, driving value from sustainable investors, ESG ETFs and inclusion in Sustainable Indices such as Dow Jones Sustainable Index or DJSI. Dow Jones Sustainability Index family tracks the stock performance of the world's leading companies in terms of economic, environmental and social criteria.

Eco-risk Mitigation: Embedding ESG in supply chain can help mitigate risks posed by environmental or labor laws. Moreover, companies can reduce likelihood of business disruptions caused by environmental issues that can occur in supply chains, such as toxic waste, water pollution etc. Such issues not only pose legal and regulatory risks but also – reputational risks.

Cost Optimizations: Supply chain sustainability allows to gather inefficiencies in the supply chain operations. For example – the amount of waste produced can be an indicator of abortive or over procurement, excess carbon emissions can indicate machinery or operational inefficiencies. Such cases indicate improvements in supply chain management practices and hence results in cost optimizations.

Customer hedging: Consumers expect and will certainly appreciate an ability to see the production, or the delivery chain of the brands they interact with or products they consume. Transparency through supply chain sustainability can help companies quickly adapt to consumers who prefer environmentally stable brands.

Opportunities for suppliers and supply chain participants

Supply chain sustainability is not only an all advantage for corporations and companies but presents massive opportunities for suppliers and to all participants in the supply chain.

Opportunity to go green: Supplier and supply chain participants themselves have an opportunity to go green and embed sustainability on its own. As a result, such suppliers can gain material, fiscal and economic benefits for their own business. A sustainable supplier or a supply chain participant with sustainability as a strategic objective can attract new business from customers who are willing to only work with such participants.

More business from customers: Incorporation of sustainability and a focus on ESG in suppliers own business and operations can help with more business from existing customers who have good sustainable practices and robust ESG strategies.

Meet the sustainable expectations: Many companies have commitments to their investors (sustainability frameworks) to engage their supply chain participants and embed good environmental and social practices. Therefor an ESG approach in their own operations will be beneficial.

ESG Strategy – Attract investors through ESG communication

Tue, 16 Mar 2021 20:01:50 GMT

Meet your investors' expectations on your ESG progress and sustainability commitments

Effective communication with your investors focused on your ESG progress is an important component of your ESG strategy. It fills the gap between investor expectations and your sustainability or ESG strategy.

Sustainability and ESG communication is an approach to engage your customers and investors, and to showcase your ESG progress and sustainability commitments. It is expected to have a positive influence on the shareholder value when you project how you drive business value with ESG & sustainability. The following checklist is essential to formulate a good ESG communication plan.

Checklist for an effective ESG communication plan

Check 1 : How does ESG fit into the business model

There are numerous opportunities to fit ESG through strategic and operational areas. This includes strategic areas such as product development or operational areas such as manufacturing, packaging or transportation and delivery. It is imperative to specify such strategic and operational areas in your sustainability / ESG communication plan and messaging.

Check 2 : Identify a list of ESG Investors Sustainable investing is growing in demand

A recent survey by BlackRock indicates that the respondents are planning to double their ESG investments by 2025. In addition to your biggest institutional investors, it is useful to identify other asset managers, ESG fund managers or ESG index owners who may be willing to add your ticker in the portfolio. This is one of the ways where ESG communication drives a direct financial impact.

Check 3 : The top 5 expectations from your investors

Your investor relations team would have a good understanding of the expectations and challenges from your institutional investors. It is also a good idea to research and analyze, and check if all existing or potential investors have similar or varied expectations. To formalize the top 5 and the most common expectations becomes very useful for your ESG communication initiatives.

Check 4 : Ensure ESG communication covers the material impact

Beyond the environmental benefits, investors also expect that companies showcase the material and financial impact of respective ESG initiatives. Your communication and messaging should include proven impact on financial health of the company. This could include areas such as increase in customer acquisition from new sustainable products or cost benefits derived from improved operational efficiency (reduction of waste, inclusion of recycled packaging etc.).

Check 5 : Engage investor relations, map stakeholder expectations

Your investor relations team will have the closest relationship with institutional investors. In addition to engaging them, we should also identify all internal and other external stakeholders who may influence or impact the ESG communication strategy. These stakeholders include internal teams such as marketing and corporate finance, and external stakeholders such as suppliers, customers and paid media.

Check 6 : Create a Digital Channel Strategy for ESG communication

Developing a digital channel strategy is an absolute imperative to engage with your investors and customers. Your investors will look at every possible digital outlet, primarily, to know about your ESG initiatives and then validate them with their own tools to check the financial impact. There are varied digital strategies but the most effective one is to create a dedicated digital vertical focused on sustainability with accountability to deliver on sustainability and ESG goals.

Check 7 : Meet regulatory and compliance requirements

Beyond the creative aspect of ESG communication, it is important that we meet regulatory and compliance requirements for our sustainability and ESG messaging. ESG regulation is an accelerating global trend hence regulation of 'soft laws' by PRI for investors, and expectations for companies to undertake due diligence on ESG disclosures is highly encouraged. We also recommend that ESG communication teams refer to similar regulations such as EU - taxonomy regulations or sustainability disclosure regulations.

Check 8 : Share your ESG performance updates regularly

Maintaining an email list of engaged or potential investors is a great way to organize and share regular updates on your ESG initiatives. This can also be part of a digital channel strategy when added as another tactic to attract more investors, customers and to keep them engaged on your ESG improvements. Providing regular updates is a successful strategy to generate investor momentum.

Check 9 : Back your messaging with measured data

To negate any perceptions of 'green washing', it is highly recommended that your ESG messaging is supported by data (and facts) to back your claims. At the least, we recommend to highlight any processes in place to measure data for your ESG initiatives as this can generate high level of confidence among investors.

Check 10 : Utilize technologies to deliver on ESG transparency

ESG transparency can deliver on trust among your investors, customers and other stakeholders alike. Platforms such as SIOChain™ and solutions such as bar code tracking can activate mechanisms to further engage your investors and customers. It is helpful to carry out such technologies or applications to support ESG communication initiatives.

If the above resonates with you, see more at ESG Communication services or contact us through the form below

How to build a strong Sustainability strategy

mack.bhatia@outlook.com (MACK BHATIA) — Sun, 15 Nov 2020 17:28:02 GMT

Sustainability Strategy is very cohesive with any business strategy. However, it needs a structured approach for companies and corporations to reap the material, fiscal and economic benefits. See on how to structure business sustainability strategies.

Corporate Sustainability Strategy is very cohesive with any business strategy. It is the integration of economic, environmental, and social aims into a firm's goals, activities, and planning, with the aim of creating long-term value for the firm. It provides an agreed framework to focus investment and drive performance, as well as engage internal and external stakeholders.

Corporations, companies, organizations and governments can gain material, fiscal and economic benefits when a sustainability strategy is well-formed. Sustainability strategy has become a crucial element in any organization’s business strategy. Largely driven by a powerful ecosystem comprising of United Nations, Institutional Investors and consortium of large banks - who collectively realize the potential of sustainability and ESG, as a result, is spreading sustainability into corporations and companies’ agendas so they can pursue sustainability as a business strategy through operational activities or otherwise.

Organizations and goals such as SDGs , Principles of Responsible Investment (PRI) , Principles of Responsible Banking and Network for Greening the Financial System (NGFS) , Sustainability Accounting Standards Board (SASB) , led by the participants of the sustainability ecosystem aims to collaborate with corporations, companies and governments to further push sustainability and ESG into the corporate structures and undertaken activities. These organization and goals at times also act as the guiding principles for corporations and companies to enable sustainability.

It is deemed that a business that doesn't factor in sustainability risks is being less successful in a number of measures, including profitability, growth, and employee retention. This in addition to any regulatory or non-compliance risks associated with corporations’ or companies’ areas and geographies of operations.

Steps to an effective and a scalable sustainability strategy

It is imperative that companies, corporations, governments and investors follow a structured approach towards a transition to sustainability. Following are the steps we undertake to help our customers and clients succeed with their sustainability initiatives:

Business Case: Companies in a transition from corporate responsibility functions to full - fledged sustainability and ESG operations division usually requires a business case to get funds for their departments. This is also applicable to existing sustainability functions who require department funding from corporate budgets to expedite their sustainability and ESG plans. Such business case development exercise should certainly mention the material, economic and fiscal benefits specifically driven by demands from institutional investors, and government regulations. It also helps when a business case mentions the growing funds flowing into ESG specific exchange traded funds ( see here ) enabling access to capital and a potential improvement in a shareholder value.

Specific Focus Areas: Nailing down the operational areas impacted by sustainability becomes the next essential step. Companies usually have multiple areas of operations. These operational areas may stretch long - from research and development up-to their supply chain and until the delivery of the end product to their customers. We work through every operational areas for our clients and customers to identify opportunities for sustainability. As an example, for a retail company like Walmart - the opportunity resides in both upstream and downstream operations such as sustainable resourcing to sustainable packaging.

Goals & SDG Alignment: Once the operational areas are defined, we work with strategic decision makers (sustainability teams and executive team members) to ensure that we have measurable goals and objectives over the period of time. This is important because we might have to work to identify baseline for sustainability goals (such as carbon emissions, use of plastics etc.) to monitor improvements over time. These goals have to be respectively aligned with one or more of the 17 Sustainability Development Goals formulated by the United Nations for us to refer.

Formulating Assessment Indicators ( KPIs): To help us out United Nations Sustainable Development Goals (UN SDGs, also known as the Global Goals) are 17 goals with 169 targets that all UN Member States have agreed to work towards achieving by the year 2030. Each target also comes up with associated indicators (232 indicators) for us to track our progress. While targets specify the goals, indicators represent the metrics by which the we can track whether these targets are achieved. Our expert team accurately aligns the formulated goals with the right SDGs, targets and indicators. It is extremely important that you engage external expertise to do so.

ESG Integration & Progress: ESG integration and metrics is where companies and corporations can reap the material, fiscal and economic benefits. Institutional investors regularly look for ESG integration and metrics through varied sources such as ESG data or ESG disclosure materials ( See more) . Investors also look at ESG and Sustainability communication materials published by the companies themselves including on websites and other digital engagement channels ( See here ). Such communication materials is also looked by governments, NGOs and more and hence it is important that any ESG disclosures and ESG communications undertaken are used to showcase business value (instead of just marketing). Our team of ESG and communication experts can help ensure this.

Engaging your Stakeholders: One of the biggest opportunities in a successful execution of sustainability strategy lies with engaging internal and external stakeholders. While internal stakeholders include employees and varied departments such as Corporate Finance, Corporate Communications, Investor relations and more, external stakeholders are primarily investors and customers. While engaging internal stakeholders is a necessary for a flawless execution, external stakeholders are primary drivers for access to capital (from tax benefits and from institutional investors), and revenues (from customers). Our approach of creating a stakeholder matrix with defined and catered messaging has been very successful with our customers and clients.

Engaging with your Suppliers: As all companies and corporations have supply chains in one form or the other, it is essential to engage your suppliers. These supply chains extend around the world, and beyond being prone to natural and political challenges - they face other risks such as climate change, water scarcity and in some cases poor labor conditions. All of these cases fall under the categories of ESG and sustainability. In one of the articles published by Harvard, it is mentioned the value at stake from sustainability concerns can be as a high as 70% of earnings before interest, taxes, depreciation, and amortization . SIOChain™ – a proprietary technology platform makes it easy for companies to manage supply chain and sustainability risks. It encourages collaboration with suppliers and enable ESG measurement so companies can improve their risk management. ( Know more about SIOChain™ ).

It is very prevalent that sustainability and ESG provides enormous value as a competitive business strategy improving company’s financial performance. However, it also brings with it complexities that requires a support of an external partner. You can reach out to us to start a conversation with us ( Contact us ).

Switch-on a Sustainable Supply Chain

mack.bhatia@outlook.com (MACK BHATIA) — Mon, 09 Nov 2020 20:48:44 GMT

It is imperative to enable a sustainable supply chain in order to meet your sustainability commitments and ESG targets. Read more.

Successful businesses have to regularly pivot or refine and cater to external pressures and circumstances. These times have presented challenges and opportunities where Businesses have to re-think their operations, seeking to transform themselves into more nimble and resilient companies and corporations. Sustainability and ESG (Environmental, Social and Governance) integration is one such opportunity. This, in fact, is an historic opportunity for companies to become better organizations.

To gain the maximum from a well-formulated sustainability strategy – it is imperative that companies and corporations focus on their supply chains. Henceforth, such companies and corporations around varied sectors are now pursuing their global supply chains to avoid disruptions. At the same time, these organizations are also working to improve supply chain sustainability, primarily finding ways to collaborate and engage with supply chain partners on defined standards and respective sustainability goals.

In recent years, a number of multinational corporations have pledged to work only with the suppliers that adhere to social and environmental standards. Typically, these MNC’s expect their first-tier suppliers to comply with those standards, and they ask that that those suppliers in turn ask for compliance from their suppliers, and so on. The aim is to create a cascade of sustainable practices that flows smoothly throughout the supply chain, as we prefer to call, supply chain participants.

W hy do you need a sustainable supply chain?

Why even bother to build a sustainable supply chain ? The answer to this question lies deep in the sustainability ecosystem largely driven by players including United Nations, Governments, Institutional investors and major corporations who realize that focusing on sustainability and Environmental, Social and Governance ( ESG ) improvements - beyond massive environmental benefits, results in operational cost reduction, better risk management and improved revenues. Following this, other companies and organizations realized the benefits and started to build their business models around sustainability.

These companies and corporations were soon required to prove that their environmental efforts are genuine and hence task forces (such as TCFD), reporting initiatives and disclosures, and accounting principles (such as Sustainable Accounting Standards Board or SASB) became the reference points for operational and strategic sustainable activities.

It became imperative that companies and corporations follow a structured approach with defined sustainability goals and sustainability commitments by 2030 or 2050 in alignment with Sustainable Development Goals well-defined by United Nations. These commitments are taken seriously by investors, governments, organizations and customers – all of which are very much responsible for both the top-line and the bottom-line numbers. And hence, reflecting on a shareholder value.

Many MNCs and other companies soon realized that it is impossible to meet these commitments unless they have visibility in their supply chain or measure environmental parameters such as use of plastic, carbon emissions and more. This is because most of the environment specific actions and operational activities reside in the supply chain operations. And therefore, it is utmost important to collaborate and engage with all supply chain participants and align them to environmental or social standards as defined by the respective sustainability commitments. This is an opportunity as such companies and corporations will be able to optimize their operations, reduce costs, able to manage risks a better way and can get compliance to regulations in the areas of their operations. But this is also a challenge.

How you can enable a sustainable supply chain

A recent Harvard Business Review report titled ‘A more sustainable supply chain’ , mentions that Companies tend to focus on their top-tier suppliers, but the real risks come lower down. It also mentions that MNCs were fore fronted with embarrassed scrutiny when they realised that, that despite their commitment and suppliers said adherence, many supply chain participants violated the sustainability standards. This was just the start at the first-tier level, and that MNCs were certain that similar scandals might have occurred at the second-tier level and so on.

Part of the above, we believe that MNCs and similar companies also lagged strict re-enforcements of sustainability standards partly because of the needs of the business and partly because of the regular push to deliver more in a short duration of the time – to meet the demands.

We at theSustainability.io have been focused on this problem for a number of years. Our technology team with a deep expertise with sustainability realized this issue a way back, researched and developed a very effective platform, SIOChain™.

The platform solves the identified problems by enabling a smooth chain of collaboration among the company, first tier suppliers, second tier suppliers and so on. This is with a minimal effort as the system takes care of the above once a process is triggered. The sustainable supply chain system SIOChain™, also informs all participants on the sustainability standards, parameters to be measured. Failure or compliance to the adherence results in warnings or incentives for the suppliers and other supply chain participants.

The most important features of SIOChain™ are that companies and corporations can measure their sustainability goals such as carbon emissions, use of plastics, waste from produce etc, through their supply chain. This encourages ESG transparency which is very encouraging to institutional investors and customers.

Know more about SIOChain™ and feel free to connect with us if you have any questions.

Sustainable Development Goals and Green Financing

mack.bhatia@outlook.com (MACK BHATIA) — Thu, 24 Sep 2020 18:11:14 GMT

Leverage Sustainable Development Goals, Finance your Sustainability strategy

The purpose of sustainable financing, as stated by the UN Environment Programme , is to increase the level of financial flows (from banking, micro-credit, insurance and investment) from the public, private and not-for-profit sectors to sustainable development priorities. The aim is to align financial systems, working with countries, financial regulators and financial sectors, and direct capital allocation to sustainable development that will shape the production and consumption patterns of tomorrow. Financial mechanisms such as Green Bonds, Social Bonds and ESG Linked Loans help this alignment as they promote public-private partnerships for sustainable development.

The Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly as an agenda for the year 2030. These 17 SDGs are an urgent call for action by developing and developed countries and provide a blueprint for the peace and prosperity for people and the planet. The SDGs also recognize issues related to the planet, such as biodiversity, and to people, such as poverty, and accept that solutions to address all of these issues are interconnected.

Green Finance (or Sustainable Finance) instruments such as Green Bonds, and bonds focused on other thematic issues such as Social Bonds, Sustainability Bonds or Sustainable Development Goal Bonds, can act as a strong bridge to the SDGs. Such initiatives allow the flow of capital to execute and meet corporate sustainability commitments. They are also attractive to institutional investors as they perceive financial commitments to sustainability as a good indicator of a corporation's ESG progress.

Related: More about Social Bonds

How are Sustainable Development Goals relevant to Corporate finance?

Each of the 17 goals comes with its respective set of targets and with the corresponding indicators to measure the progress against those targets.

Corporate finance when aligned with the corporate sustainability strategy often finds it a challenge to find and allocate capital to fund sustainability commitments. This is when they can look towards a suite of Sustainable finance instruments such as Green Bonds, Social Bonds, Sustainability Bonds or Sustainability-Linked Bonds commonly referred to as ESG Linked Bonds. The finance teams can also look at loan instruments such as Green loans to meet their financial needs.

Related : Sustainability Communication and Sustainable Finance Instruments

Learn more about Green Bond Principles, Social Bond Principles or Sustainability Bond Guidelines.

While developing this framework, issuers can map the use of proceeds with the most relevant SDG. As a next step, issuers can then refer to the respective targets for the specific SDG to measure and report on the impact of their projects. Corporations and companies should ensure that the use of proceeds are aligned with the overarching sustainability commitments or with the ESG integration strategy.

Although climate action underpins the some of the SDGs (SDG 13) and is a crosscutting theme, issuers have an opportunity to also earmark the use of proceeds to other categories such as Socioeconomic Advancement and Empowerment (SDG 1), Terrestrial and Aquatic Biodiversity Conservation (SDG 14 and SDG 15), Affordable Basic Infrastructure (SDG 3), or Climate Change Adaption (SDG 13). The spreadsheet supplement (download) created by ICMA includes a more detailed listings of SDG targets mapped to the Green Bond Principles and Social Bond Principles.

For reference, this High-Level Mapping to the Sustainable Development Goals developed by ICMA aims to provide a broad frame of reference by which issuers, investors and bond market participants can evaluate the financing objectives of a given Green, Social or Sustainability Bond/Bond or a loan programme against the Sustainable Development Goals (SDGs).

The rapidly growing green finance sphere is already providing capital for assets that simultaneously contribute to climate action and many of the other SDGs. Corporations, when aligned with SDGs, have an opportunity to make a positive impact through sustainable development.

Learn more about Sustainable Finance Services . These should be communicated well to investors and customers for material benefits.

Enable a Sustainable Supply Chain - SIOChain

mack.bhatia@outlook.com (MACK BHATIA) — Sun, 20 Sep 2020 20:48:35 GMT

Sustainable Supply Chain Management platform.

In recent years a rising number of multinational corporations have pledged to work only with suppliers that adhere to social and environmental standards. Typically, these MNCs expect their first-tier suppliers to comply with those standards, and they ask that those suppliers in turn ask for compliance from their suppliers—who ideally ask the same from their suppliers. And so on. The aim is to create a cascade of sustainable practices that flows smoothly throughout the supply chain, or, as we prefer to call it, the supply network.

The world is changing faster than ever. Having a sustainable supply chain is pivotal for businesses trying to stay afloat amidst all of today's uncertainty. Sustainability , beyond a corporate social responsibility initiative, is now a business strategy.

In a comprehensive case study by Harvard Business Review, researchers Veronica H. Vellina and Dennis A. Gioia presents some of the key challenges and opportunities to build a sustainable supply chain . The research highlights some of the key problems faced by corporations where the supply chain is spread across geographies. Many suppliers lacked environmental management systems and procedures to handle other problems such as hazardous labor conditions, waste management and other related practices.

Minimizing environmental impact, beyond the environmental benefits has huge financial benefits for a corporation. Recently, CNBC while speaking with a leading investor – DWS Group reported that “ over $19 billion flowed into an ESG ETF in 2020, bringing a total to over of $40 billion “, they said . ESG ETF are exchange traded funds which invests in companies with strong sustainability progress or who has Environmental €, Social (S) and Governance (G) metrics as one of their core strategic objectives.

Beyond the above reducing unnecessary costs and creating a brand story that authentically connects with an audience are all positive end goals that businesses desire. However, the precise steps and paths to get there can be difficult to discern.

Corporations have realized that it will be difficult to meet the commitments unless they have visibility in their supply chains and unless they can align them to build a sustainable supply chain. Sometimes the solutions are rooted in areas often overlooked by companies just starting on their path towards a sustainable supply chain.

Related: How corporations can leverage Sustainability and ESG integration

Enable a Sustainable Supply Chain - SIOChain

theSustainability.io, a corporate sustainability solutions company, presents a very neat solution around this called as SIOChain . The technology platform allows such corporations to collaborate with their suppliers and other supply chain participants to measure sustainability metrics. This encourages a trust and transparency among the supply chain participants and aligns everyone with a single objective – meet sustainability commitments.

These commitments are usually strategically aligned to corporations sustainability strategy such as net zero carbon emissions, reduction of plastic and more. The sustainable supply chain platform, SIOChain, is well designed to meet these needs. The platform presents a very effective way to engage and align with all supply chain participants, so the corporations can showcase their sustainability progress to their investors and create a brand story around the sustainable supply chain initiative.

You can learn more about sustainable supply chain and drop your questions at Sustainable supply chain management page .

Sustainability (ESG) Communication and Sustainable Finance

mack.bhatia@outlook.com (MACK BHATIA) — Tue, 14 Jul 2020 19:36:42 GMT

Sustainability (ESG) communication acts as a catalyst to capital raising activities when companies look for options among the sustainable finance instruments.

The established links between corporate sustainable strategies and increasing financial returns has resulted in a growing number of investors now considering environmental, social and governance (ESG) factors in their investment decisions.

As a result, investors and analysts are now searching for authentic ESG communication material on corporate digital communication platforms and others. But despite this fast-growing interest, most companies are lagging behind in terms of innovation and creativity when it comes to conveying authentic sustainability messages to the broader investment community.

As the article at HBR.org states, “Larry Frank isn’t going to read your sustainability report” , companies will need to communicate very differently with their investors. Disclosing their performance on the most material environmental or social issues (determined by the Sustainability Accounting Standards Board ) as Fink recommends, is a necessary step.

Sustainability Communication as a catalyst to Sustainable Finance

Sustainability (ESG) communication acts as a catalyst to capital raising activities when companies look for options in the financial markets.

Sustainable finance doesn’t have a definition by itself. Although, as our team puts it – it can be referred as ‘financial instruments and support available in the market specifically catered to provide capital to projects with environmental or social benefits”. Sustainable finance ecosystem is also supported by organizations such as International Capital Market Association (ICMA) and Loan Market Association (or LMA) . These organizations provide guidelines to structure your process to the expectations of market and lenders.

The purpose of green financing, as stated by the UN Environment Programme , is to increase the level of financial flows (from banking, micro-credit, insurance and investment) from the public, private and not-for-profit sectors to sustainable development priorities. The aim is to align financial systems, working with countries, financial regulators and financial sectors, to direct capital allocation to sustainable development that will shape the production and consumption patterns of tomorrow. Financial mechanisms such as Green Bonds help this alignment as they promote public-private partnerships for sustainable development.

Growing pressure across financial markets to consider environmental impact and risk as a major plank in investment decisions helped push fixed income instruments such as green and sustainable bond issues to record-breaking levels. Investors hedge against climate risk by investing in green bonds or social bonds and into companies which are serious about their sustainability progress.

Sustainability communication plays a very important role. Sustainable finance initiatives such as issuance of green bonds or social bonds advocates the sustainability story. It is an encouraging sign to investors that the company issuing bonds is serious about their sustainability progress. These initiatives, as we recommend and under regulatory framework should be added to the sustainability (or ESG) communication channels. Moreover, prior to bond issuances or loan applications lenders and investors certainly look at a company’s Sustainability/ESG profile to monitor your sustainability commitments.

ESG Communication can lower the cost of capital

One of the fixed income instruments that a company’s sustainability strategy can leverage is popularly known as ESG Linked Loan or Sustainability-Linked Loan. The interest rates on these types of loans is tied on the company’s ESG performance. This means, the better a company performs on its ESG parameters the lower the interest rate. Similarly, issuers can also leverage Sustainability-Linked Bonds where the financial or structural characteristics can vary depending on whether the issuer achieves pre-defined Sustainability / ESG objectives.

Connect with us to know more about how can we generate business value through Sustainability/ESG communication initiatives.

What is Sustainability Communication? Is it different than ESG Communication..

mack.bhatia@outlook.com (MACK BHATIA) — Wed, 10 Jun 2020 16:34:17 GMT

"Sustainability communication is a business strategy for companies who have integrated sustainability into their operational and strategic activities."

What is Sustainability Communication

Sustainability communication is a business strategy for companies who have integrated sustainability into their operational and strategic activities. It allows the company to tell customers, consumers, and other stakeholders on their business, operations, what you do and how you do your business using a sustainable approach.

It is a mechanism to let customers, investors and other stakeholders know that your company genuinely cares about the environment or other social causes. A big part of creating sustainable development in any industry is to show your investors and customers that you are really working towards your sustainability commitments. An honest communication certainly showcases your company is contributing to environmental or social causes.

The way we see it - “Sustainability communication is a strategic approach to engage stakeholders who either are looking up to you as consumers, or institutional investors with sustainability portfolio, willing to invest in you. It is extremely important for all stakeholders, but specifically for investors to know that you are truly on a sustainable journey”.

Are you pursuing Sustainability Communication or ESG Communication, or both ?

We get asked this question a lot – “How is Sustainability communication different from ESG Communication”. The answer depends on who are you engaging with. While Sustainability communication caters many stakeholders, including customers and employees, ESG communication is mainly meant to engage investors.

This is an important message and a core need of the investors. Keeping this mind, a genuine ESG communication profile can certainly engage your investors and in the right manner.

Sustainability communication is a generic term to highlight a sustainability strategy of the company. It tells customers, consumers and other stakeholders that a company is committed to pursuing sustainable development and is moving towards a more sustainable transition. This role usually sits with the sustainability leadership or corporate social responsibility teams (CSR) within a company. And the primary stakeholders are end customers and investors.

The target audience for ESG (Environment, Social or Governance factors) communication is very much Investors. ESG is a not a common term used among the consumers but is largely driven by Institutional investors who regularly look for ESG Issues that a company may have. Investors assess ESG factors, specifically those which have a material impact on a company. This role is very largely “Investor relations” with a collaboration with corporate social responsibility teams and sustainability leadership. Financial teams certainly become a part of the conversation to identify the financial impact of sustainability or ESG initiatives undertaken by a company. See how we can help you with your ESG communication profile.

ESG and sustainability works in tandem to deliver on business value so you can meet your investors' expectations and drive customer engagement.

Alignment with your Sustainability Strategy

A company’s sustainability strategy involves a thorough look into both the external environment and its own internal operational and strategic activities. Communication initiatives should be very much tied to the overarching goals as defined by a sustainability strategy. The most successful communications are the ones which tightly defines the target audiences and develop messages appropriate to them. Delivery channels then get carefully chosen to reach the audience as intended. The channels for delivery must have a measurable impact on the audience profiles, and where the results can be measured – this results in a huge value.

Utilizing traditional channels is good but we highly recommend moving beyond reporting and investing into digital channels for impact, measurement and outreach. Digital channels are measurable and can be quickly optimized as needed.

Thank you for reading the insights. We encourage exceptional readers like yourself to donate $25 so we can continue to bring excellent content for you, because we all need to thrive together and act fast on climate change.

Avoid ‘Greenwashing’ in all ways

Greenwashing refers to a problem where companies try to appear more sustainable than they are through the use of marketing and communication tools. It is a risk that companies should avoid at all costs. Public traded companies are at a higher risk as greenwashing can seriously impact a share holder value. Investors look for a company’s sustainability communication profile and then authentic signals to validate before they buy a stake in a company. Sooner or later investors and other stakeholders will certainly know about the truth on your sustainability transition.

Are you looking for a Sustainability communication and ESG partner ? Connect with us.

Avoid ‘Greenwashing’ in all ways

Are you loo king for a Sustainability communication and ESG partner ? Connect with us.

Effective ESG or Sustainability communication strategies to address increasing Investor Interest

Mon, 11 May 2020 21:19:30 GMT

"The strategy’s quality orientation toward companies with strong balance sheets, high returns, sustainable cashflows and leading ESG profiles helped during the turbulent times", ClearBridge Investments

As global assets integrating Environmental, Social and Governance (ESG) considerations continue to swell, institutional investors globally are increasingly engaging with their portfolio companies to improve transparency and enact change on a broad range of ESG and sustainability-related issues. Companies & ESG marketing professionals (typically working within Investor Relations, Corporate Communications or Sustainability teams) should act now to stay on top of the rapidly changing developments in this area and more effectively control the companies’ ESG related messaging.

Investor engagement on ESG issues isn’t a new phenomenon. Investors have been coming together for decades to pool resources and draw on collective experience in order to influence practices and behaviours for issues of concern at their portfolio companies. For example, the Social Investment Forum, a coalition of roughly 400 investors joined forces in the late 1990s to pressure clothing manufacturers and retailers to take a tougher stance against apparel industry labor practices. However, such initiatives were sporadic and were composed primarily of a small number of pioneering investors with a sole focus on ESG or those where the end beneficiary was easy to define.

But in recent years, engagement topics have grown significantly in tandem with the tremendous growth in ESG investing. The list of engagement topics now spans those with global reach including climate risk, gender diversity, and human rights, to very specific and localized issues such as deforestation in South America and opioid manufacturing and distribution in the U.S.

The explosion in growing investor interest in ESG, is increasingly underpinned by numerous studies showing that good ESG performance can potentially Enhance risk-adjusted returns. Shifting client preferences, including those from millennial investors who increasingly want to link their values to their investment decisions, has also helped to drive the interest in ESG. On the other hand Industry collaborations such as the Environmental, Social and Governance industry collaboration (PRI) , and S ustainable Investment programs by large institutional investors such as BlackRock have gained industry attention.

Investor's expectations from ESG Communication profiles

In the most recent Q1 2020 commentary by Sustainability Leaders Strategy Portfolio Manager, ClearBridge Investments stated that " The Strategy’s quality orientation toward companies with strong balance sheets, high returns, sustainable cash flows and leading ESG profiles helped during a turbulent quarter ".

Furthermore, many investors are increasingly looking for efficient ways to collaborate and engage with portfolio companies. They help channel issues of concern to corporate management teams, which can improve communication. Many ESG issues are complex, and collaboration allows investors to share resources and build knowledge and skills in these areas. It also gives smaller and resource-constrained investors a way to “punch above their weight” and make their voices heard.

Investors are organizing and looking for ways to engage with portfolio companies on their ESG profiles. These include company-specific engagements, topic-related campaigns such as methane emissions or water management, and to advance their own ESG strategies with certain initiatives such as decarbonizing their portfolios. Investors are also lending support to reporting and disclosure improvement initiatives such as the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB).

Companies cannot afford to ignore these new ESG demands and ESG communication models can make it easier for investors, on the other hand Companies will have easier access to capital.

Proactive steps companies c an take now to be more effective with ESG communication

"If you use sustainability and ESG as a marketing tool, you’ll be found out. If you use it to drive business value, you're going to be successful." David Blood, Generation Investment Management. This is an important message and a core need of the investors. Keeping this mind, a genuine ESG communication profile can certainly engage your investors and in the right manner. The following steps to organize ESG communications with investors are useful:

Maintain a company-specific radar to track relevant investor initiatives including your investor signatories, ongoing research and regulation overall and in your company’s sector.

Monitor investor signatories to your company’s shareholder base and track how ESG initiatives are impacting their presence in your company and sector.

Prioritize efforts. Examine issues being raised by the investors in context of how material and relevant they are to the company’s core business. While materiality is in the eye of the beholder, focus first on the issues with the most direct links to the company’s key business and financial performance metrics (revenues, cash flow, operating margins, etc.). Then, continue monitoring the pace of the growth in the others.

Consider an initial engagement with investors that have made contact.

Analyze how far off you are from fulfilling the investor’s request(s) and the time and internal resources that would be needed.

Build your knowledge base. Identify the surveys, reporting initiatives and data that is driving ESG decision-making by key investors.

Benchmark practices and disclosures against industry peers and leading practices more generally.

With the core investor audience in mind, consider whether any reporting and disclosure enhancements are required and in which formats, such as a smaller, more focused report versus the company’s CSR report.

Create a robust ESG engagement plan that is genuine & which focuses on driving business value to ensure that the company gets credit for all of the good things it is doing on ESG.

Determine how incoming requests for ESG-related information will be handled before investors come calling. Teams and individuals that should be involved in initial engagements include investor relations, corporate communications, CSR team, the corporate secretary, legal counsel and treasury. Senior executives, and even board members, can be helpful for conversations later on.

An interesting addition to the above steps is pursuing corporate bond marketing as a strategic addition to engaging your investors. Sustainable finance (or green finance) is growing rapidly and companies can leverage issuance of green bond, social bond or a sustainability bond. As an increasing number of investors search for green opportunities, the green, social or a sustainability label to a bond issuance helps communicate the issuer’s sustainability strategy both to investors, clients and the public.

The above steps require considerable time and internal resources. If you feel that internal resources in your company could be insufficient, contact us. We would be happy to explore your specific needs and how we can help. ESG is a marathon, not a sprint. Through a digital first approach and by taking these steps, companies can stay on top of the rapidly shifting developments in ESG and have a competitive advantage, this is in turn can open up easier access to capital.

ESG - Integration strategy, sustainable finance and communication

Wed, 29 Apr 2020 17:26:30 GMT

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.

The relevance of Social Bonds and ESG Communication. The “S” of ESG.

Fri, 10 Apr 2020 01:02:57 GMT

Social Bonds, Social Bond framework and Social Bond Principles. The "S" of ESG

As the environmental concern grew over the past few years, the social factor came in secondary. With the recent events, however, The “S” or the “Social factors” under a company’s ESG profile will gain far more attention among investors and companies.

The relevance of social projects and social bonds at the time cannot be undermined as they bring in an unprecedented opportunity at the times of economic uncertainty. This article aims to answer the most important questions on the “Social” component of ESG which companies, CSR teams and bond issuers may have as they look for opportunities to improve the ESG profile. Read on to know more as the post talks about Social Projects, Social Bonds, Social project framework, Social Bond Principles, need for communication and more.

What are Social Bonds?

The social bond market aims to enable and mobilize debt markets to fund projects that contribute to positive social outcomes. Social Bonds are use of proceeds bonds that raise funds for new and existing projects with positive social outcomes.

Social bonds facilitate capital-raising and investments for new and existing projects which have social benefits and where the investments can mitigate specific social issues. The current situation and market dynamics requires that companies and employers focus on issues such as access to essential services, social and economic empowerment, affordable housing and employment generation and retention.

The total volume of social bonds is currently valued at greater than USD 4.2 billion, with Australia leading the number of issuances so far. However, we anticipate the growth of Social Bond market in 2020 and beyond will certainly grow.

About Social Bond Principles

“ The Social Bond Principles (SBP) formulated by International Capital Market Association (or ICMA), are voluntary process guidelines that recommend transparency and disclosure, and promote integrity in the development of the Social Bond market ”, ICMA.

The ICMA Social Bond Principles provide guidance to issuers on the key components needed to issue a social bond. Issuers who intend to launch a social bond are required to build a Social Bond Framework, which should align to the following four components as specified under the Social Bond Principles.

Use of proceeds: At the core, it is imperative that the use of proceeds (associated funds) are utilized to finance or re-finance Social projects. The Social Bond Principles explicitly define the eligible categories under which projects can be labelled Social. These projects include categories such as providing food security, socioeconomic advancement and empowering opportunities, and employment generation projects.

Process for project evaluation & selection: Social bond issuers should clearly communicate the social objectives of the projects to their investors. The issuers are encouraged to specify the process of a project fits into the Social Project categories. It is highly encouraged that the issuers align their evaluation and selection criteria in alignment with their overall strategic objectives, goals and strategy as specified in the Sustainability action plan.

Management of proceeds: The SBP specify that proceeds (funds) are managed properly in be credited to a sub-account, moved to a sub-portfolio or otherwise tracked by the issuer in an appropriate manner, and attested to by the issuer in a formal internal process linked to the issuer’s lending and investment operations for Social Projects.

Reporting: Reporting is an integral part of an issuer’s Social Bond Framework. Issuers are required to report on the allocation of proceeds to eligible Social projects. Issuers should make, and keep, readily available up to date information on the use of proceeds to be renewed annually until full allocation, and on a timely basis in the case of material developments. This annual report should include a list of the projects to which Social Bond proceeds have been allocated, as well as a brief description of the projects and the amounts allocated, and their expected impact.

About Social Projects

Social projects are categories of projects that address global social challenges. Social projects assist in understanding, assessing, planning and managing the issues associated with people.

These projects directly aim to address or mitigate a specific social issue and/or seek to achieve positive social outcomes especially but not exclusively for a target population(s). The categories of social projects include important issues such as access to essential services, socioeconomic advancement and empowerment and employment generation including SME financing and micro-finance.

Social projects and its alignment with Sustainable Development Goals

The Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly as an agenda for the year 2030. Refer to the 17 SDGS and choose the goals that best aligns with the objectives of the social project. As an example, one of the most relevant SDG to social projects is Sustainable Development Goal (SDG 8) which encourages companies to take actions for sustainable economic growth. Global economy is growing at a slower rate and more progress is needed to increase employment opportunities. To fund the social projects, companies can always leverage the financial instruments available (such as Social Bonds) in the market to fund the Social Projects.

Social Bond Framework

A social bond framework is a document which mentions your eligible projects. The document aligns with the components of Social Bond Principles and briefly mentions use of proceeds, management of proceeds, your process of evaluation of social projects and how you plan to report on the proceeds and the progress. It is recommended that your projects also align your sustainability strategy as per the sustainable action plan. See an example of a Social Bond Framework.

Connect with us to know more about Social Bond Framework and ESG Communication

ESG Impact and Sustainability Communication

Tue, 31 Mar 2020 14:08:12 GMT

Engage your investors with sustainability communication on your ESG improvements

What is ESG

Environmental, Social and Governance (ESG) factors or criteria are a set of strategic and operational standards followed by a company which has a potential impact on environment or society. In other words, it is a framework for assessing the impact of the sustainability and ethical practices of a company.

While the environmental factor (E) is primarily concerned with the company’s influence on the environment and its ability to mitigate various risks that could harm the environment, the social factor (S) investigates the company’s relationships with other businesses and communities. Governance (G) is concerned with the internal company’s affairs and the relationships with the main company’s stakeholders, including its employees and the shareholders.

Investors look towards these ESG factors to make their investment decisions. The ESG criteria also helps determine the financial and future performance of the companies ( in terms of both returns and risks ). This investment decision making practice commonly known as responsible investing, is followed by numerous asset owners and a sset managers moving towards making sustainability as a new standard of investing. BlackRock, as an example have already taken significant steps towards to make sustainable investing as a key part of their investment strategy .

Sustainable Investing and ESG Integration

Sustainable investing is about investing in the progress of the companies who are focused (in a way) to solve the existing environmental or social challenges. The approach is to identify those companies who are making significant efforts to pioneer ways in their operational, product or business strategies and address challenges such as climate change or other social issues. Investors now recognize that these companies are positioned to grow in a longer term.

The growth in sustainable investing is largely driven by financial decision makers, regulators and governments incorporating sustainability into their investment information and into the decision making process. These financial decision makers are motivated by the Six Principles of Responsible Investment (PRI) which were formulated by United Nations .

The PRIs addresses the current challenges were developed by the investors and for the investors in order to incorporate sustainability into the financial ecosystem and investment decision making process.

About ESG Integration

ESG Integration is the practice to incorporate ESG information into the investment decisions. Looking at it another way - ESG integration and the ESG components helps investors analyze the material factors to make informed investment decisions. Among the most important reasons to integrate ESG factors in the sustainable portfolio, the following two are the most valuable:

Risk, returns and opportunities: ESG factors are considered to be an important parameter to measure company's long term performance. Investors incorporate ESG factors to lower their risk or to generate better returns. Primarily, investors turn to ESG factors to attempt and avoid risk in an individual company or a sector.

Materiality: Materiality is another key component of ESG integration. It primarily involves giving more importance to ESG issues or the ESG factors which are likely to affect a corporate's financial performance. Financially material ESG factors have a significant impact (positive or negative) on a company’s business model, revenue growth, cash, margins or other forms of capital.

How do investors understand the ESG Factors?

Practitioners and analysts study ESG factors using the ESG data available for a company or an organization. Investors can access this data through varied ESG data service providers or through any sustainability communication materials. They analyze this data to try identify the ESG factors with a potential material impact on the company and forecast any risks and opportunities.

Investors can also look if any of the companies in the portfolio have any ESG scores available publicly or through any rating agencies. ESG rating agencies do a deep research using varied methodologies and then score companies based on a set criteria. Investors either trust ESG data and ESG Ratings or embed this ESG data into their own tools for further analysis.

Corporates can also get their own scores through the rating agencies. This can give corporates a more in-depth view of how they are perceived in the market. They can look into the ESG parameters that investors are most interested in. There is a huge opportunity for corporates to showcase their ESG score or identify opportunities of improvements in their ESG factors. This message should be part of any sustainability (ESG) communication materials developed by corporates and companies. Read more on mapping sustainability communication with respective stakeholders.

Adding ESG improvements and ESG impact in their sustainability communication profile develops trust and transparency among investors and other stakeholders.

ESG and Sustainability communication

Institutional and individual investors look for signals to help them make better investment decisions and reduce their risk with their sustainable portfolios. Investors will also want to strengthen their reputation on sustainable investment. The most important component of ESG communication is how you drive business value with ESG and sustainability.

Analysts and practitioners collate the ESG information from various sources which includes company reports, filings and any publicly available information through information on corporate websites, reports, videos, interviews, and other communication materials. They then refer and assess through this list of available information to periodically review the ESG impact and materiality impacts.

Regular communication on how you address ESG issues and your progress towards the sustainability commitments is a critical factor in influencing the investment decisions. Moreover it is very important to maintain the reputation of the company. Stock prices depends, or at-least in part, on companies impact on environment and society.

Showcasing our ESG impact or your progress towards your sustainability commitments influences the sentiment among the shareholders and builds upon your reputation. Hence, sustainability communication is no doubt the most important component of a sustainability strategy.

Key components of corporate sustainability

Mon, 30 Mar 2020 04:58:13 GMT

Execute your sustainability efforts focusing on the following four components

Corporate sustainability is a practice by which companies activate significant efforts to develop solutions to solve world’s biggest challenges such as a climate change. It is about pioneering better ways and enable sustainable practices within the internal and external environments.

We have noticed that even when corporate sustainability becomes one of the key strategic initiatives, the use of sustainability in different contexts can distract the execution of sustainability efforts within the organization. Henceforth, it is important that companies and sustainability leaders know on where to focus so to accelerate sustainable development.

The following illustrations showcases the four very important components to be included in the execution of sustainable deliverables.

The importance of communication in sustainability & sustainable strategies

Mon, 17 Feb 2020 14:57:45 GMT

Sustainability, beyond the popularity of the word itself is a business strategy. Companies and organizations can benefit by mapping the objectives of their sustainability strategy with the expectations of the stakeholders – mainly investors and customers. Although a top line plan - this approach has a healthy influence on the bottom-line growth of the company.

Sustainability communication is an approach to engage your customers and investors in order to showcase your progress on sustainability commitments. It is understood to have a positive influence on the shareholder value when you showcase how you drive business value with ESG & sustainability. Sustainability communication effectively engages investors, customers or employees as the key stakeholders, and aligns well with the company's overall strategic objectives as defined by the sustainability action plan. Any action plan should define the role of communication in sustainable development .

A thorough sustainability communication strategy is mandatory to have the desired benefits – both non-material and material. Sustainability communication strategy, like any other strategy, has to start with a data-driven understanding of an audience and the stakeholders. It is imperative that we map out the motivations with messages that resonates. The right mix of communication channels can then accelerate the delivery of these messages and forward. The below illustration explains the concept.

As an example, Institutional investors will look for sustainability (or ESG) factors which are likely to have an impact of a company's financial performance, while a customer will be interested in non-material factors such as sustainable sourcing or sustainable products. Hence, a thorough sustainability communication strategy is mandatory to have the desired benefits – both non-material and material.

Accor hotels as an example does this well with its Planet 21 program. Accor’s planet 21 program demonstrates the practice of sustainability communication with a clear articulation of its strategic commitments followed by regular updates on their web channels. Accor also shares the progress using well- formed videos and other digital mediums to articulate their excitement, progress on the commitments and the action plan. The continuous re-iteration of the message forms a positive opinion among the investor audience and its customers.

More on effective strategies to engage your investors and the well formulated tactics can be seen here at the next blog post (Click here).

ESG and Sustainable communication

One of the most important advantages of sustainability communication is that it helps improve the company’s ESG Rating. ESG factors ( Environmental, Social and Governance factors ) are used to measure the sustainability or ethical impacts of a company. ESG Ratings or an ESG score , in many cases, can act as a tangible indicator of a sustainability performance.

It is widely used by investors to foresee any financial risks posed by the company’s operational or non-operational activities as it relates to ESG factors. Investors and shareholders are always keen on looking at the company’s ESG score and improvements within. Read more on how ESG Impact and Sustainability communication works together (Click here).

While transparency through media and other channels drives customer retention and affinity, sustainability communication impacts the shareholder value.

Role of Corporate Social Responsibility (CSR) Champions / Sustainability teams

The teams that manage Corporate Social Responsibility (CSR) or Sustainability programs are a very important vertical in any organization. Apart from the many benefits that the CSR or Sustainability teams brings in - management of reputation risks is a very important responsibility of CSR professionals. ESG Scores, among many signals, also looks at a company's sustainability profile (including any CSR program). Since CSR / Sustainability teams are heavily involved, we believe these teams can positively influence the company's ESG score.

Investors and customers regularly look for indicators to gather confidence in company’s progress towards their sustainability commitments. Hence, well-formed communication efforts are impactful when engaging with your stakeholders. A well-funded CSR/Sustainability teams can be dedicated to (or with a help of a dedicated partner such as us) activate channels for access to capital through investor (sustainable investing) out-reach.

Know more about ESG communication services or connect with us through the form below.

Sustainability and the importance of Supply Chain

Sun, 09 Feb 2020 16:38:05 GMT

Importance of Green Supply Chain™

Sustainability, is no longer a distant term, and is at the core of many organizations and their strategic initiatives. The research shows that the quarter of the world’s top corporations have commitments for credible climate action for 2030. This number has certainly increased over the last few years, however we still have the other three-quarters of the top tier companies who should ideally step up. We do anticipate that the outcome from those companies with a credible sustainable action plan and looking at their results, like any other industry, will encourage and others to join the bandwagon.

Corporate responsibility was existent in many companies but the general observation is that climate change, as it sits now, is no longer an optional category among the Corporate and Social Responsibility objectives. This transition seems to be driven by many factors including investor expectations, business cases, customer expectations, demands from employees and more. Out of all factors however, we noticed that the business leaders were more attentive becoming industry compliant and to gain a competitive advantage among their peers. The two reasons are enough and an adequate push for corporations to take actions and reduce their carbon footprint. The 3rd reason, and rather an important factor is - Transparency.

Transparency, as a matter of fact, has two advantages – First, the more transparent we are with our sustainability action plan and the steps business leaders take to measure the commitments, the more trust is what we develop with our investors and customers. The second is that corporations largely benefit from transparency as they are able to identify potential inefficiencies and focus on opportunities as a transparency's by-product.

The biggest opportunities through transparency lies in any organization’s supply chain. General Motors, as an example was not only able to reduce their costs in supply chain, but through their supply chain compliance program, was able to manage significant risks through systematic and collaborative efforts with their 3400 strong supplier base.

Supply chain has a significant contribution to any measurable goals defined by an organization’s sustainability action plan. Many organizations sooner or later realize that their goals will not be met unless they have visibility into their end-to-end supply chain. This is until steps are undertaken to optimize the supply chain operations.

As an example – one of the 5 sustainable commitments as defined by BIC Inc. “Writing the Future, Together” program is to ensure that the company is able to identify and collaborate with the strategic suppliers and ensure most secure, innovative and efficient sourcing among their complex supply chain. However, to achieve the objectives the supply chain participants should be able to track the journey of the supplies and should be able to engage and build trust among themselves.

Mr. Chintan Shah , who heads the Supply Chain Operations in Canada for BIC Inc. articulates this concept really well. “Optimizing our supply chain is one of our key sustainability commitments. Our internal assessment indicates that we can achieve our goals when we work together with our suppliers and vendors. We will now like to track the journey of our supplies and have plans to engage and collaborate with our Tier 1 suppliers to help us meet our objectives.”

As observed, most companies realize that either most GHG emissions, or the maximum percentage of waste occurs somewhere or around the journey of a supply chain. Companies will also want to encourage their suppliers to follow the path of sustainability. Eventually customers and investors will want to have a transparency on the ethical practices of the companies they invest in and will demand transparency on the source of product that they just purchased.

SIOChain™ is one of the platforms that can help achieve this. Contact us to know more and how our team can develop your action plan or support to help you achieve a sustainable supply chain.

3 Reasons to have a Sustainability Strategy

Sat, 02 Mar 2019 22:00:58 GMT

Business entities should contribute to the Green economy

The World Bank Group’s environment strategy lays out an ambitious agenda to support “green, clean and sustainable” paths for the countries around the world, specifically in the developing economies. This is in parallel to the ‘Social’ agendas. While ‘Green’ focuses on funding projects that helps improving environmental health, Social agenda encourages countries to develop innovative and resilient solutions to social issues, such as reduction of poverty and issues impacting women, access to health and more.

Business entities and government entities, are hence, encouraged to contribute to meet the green or social objectives. Business entities should take this as an opportunity since investing in green initiatives – either to improve operational efficiency, or to incorporate green or sustainable initiatives in their product, or business strategy, have financial and material benefits.

Once a treasury decides it as an opportunity and plans to raise capital, it is also important ithat organisations formulate a marketing strategy, to gather the true material benefits of adding sustainability into their business strategy.

All about Green Bonds

Fri, 22 Feb 2019 03:54:59 GMT

Capital markets and bonds have been at hand in hand since the inception. Ideal world, and in primary markets new stock or bond issues are sold to investors often via mechanism known as underwriting. Long term funds are raised by government entities (municipal, local or national) and business entities. These can be done traded in the secondary markets. This is Wikipedia of bond market – nothing more and nothing less.

Now replace the word “bond” in the above paragraph with “Green Bonds”. When you read it again, you know you have the essence of a Green Bond.

What are Green Bonds

To build upon what you just read – green bonds are simple ordinary bonds like any other bond but with one difference, the issuer promises that they will use the proceeds to green investments, green projects or green assets being refinanced.

Anyone who can issue a bond can also issue a green bond. A government entity (municipality, local or national) or a business entity, or a bank can raise long term funds using a green bond as an instrument.

To add to the above, there is a lot more than “could issue green bonds” because any institution that has never issued a bond in the emerging markets but has a reasonable chance of being credit worthy could have a short at this. Governments that haven’t done sovereign for ages can issue a Green Bonds. There are also green retail instruments like term deposits that banks issue – like a savings kind of a bond and it goes on and on.

Who buys Green Bonds?

It is incredible how many people are buying and investing in green bonds. The level of support from institutional investors, retail investors, governments, treasuries, and even a few central banks are interested in buying green bonds and are trying to find the credible green bonds.

As Sean Kidney, CEO of Climate Bonds Initiative states “The demand is huge – we see over subscription is a norm in this market. Every green bond gets 1.5 times to sometimes as much 6 times as many orders for the body of bond that is offered. This is great for a treasury office, but the biggest investors are institutional investors of various kinds such as pension funds, insurance, government investors”

The concept is very simple, Green bonds, like any other bond has the same investment, same interest rate, same risk but with a very special feature. The money goes to helping us tackle climate change. Climate change is a huge ecological challenge that we all need to address. It is imperative that we all contribute. This is exactly why we need to market the potential of bonds – the type of bond and its intention so to get investors in the primary and secondary markets. Digital marketing has a great potential that all corporations and organizations needs to jump into.

When we see from an issuer perspective – this is absolutely a great question.

The primary reason is that Green Bonds are a great marketing device. There are a whole lot of investors like you and I who care about the environment and the climate change. We would like to have a chance to invest in an equivalent risk instrument. What we are trying to say here is that issuers get to pick new investors. In many cases, we get around 10% – 15%, or even up to 68% new investors to the book. This is great!

The second reason is stickiness, many banks have reported that their existing customers are asking for more of green bonds, or similar instruments such as social bonds or sustainability bonds. This helps in developing a deep relationship with your investors as we get cohesive through a common purpose to help the environment.

Third, there is also a correlation between corporates that issue green bonds and their stock price. We believe that the investors are looking into corporate profiles to check who is in a better place to transition to a green economy. This when added with a less policy risk becomes a very likeable stock.

Green bonds started off to be largely used for renewable energy. It evolved, until now, to be used for almost everything that is relevant to our transition to a low-carbon economy and helps to address new environmental challenges.

Examples of relevancy include projects such as for: renewable energy, green buildings (energy efficient buildings), water investments, and even agriculture investments. There is also a great argument on how green bonds or sustainability bonds can be used to fund technology projects such as used for broadband, and about its potential to reduce emissions.

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How to build a strong Sustainability strategy

Sustainability Strategy is very cohesive with any business strategy. However, it needs a structured approach for companies and corporations to reap the material, fiscal and economic benefits. See on how to structure business sustainability strategies.

Switch-on a Sustainable Supply Chain

It is imperative to enable a sustainable supply chain in order to meet your sustainability commitments and ESG targets. Read more. ﻿

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What is Sustainability Communication? Is it different than ESG Communication..

"Sustainability communication is a business strategy for companies who have integrated sustainability into their operational and strategic activities."

Effective ESG or Sustainability communication strategies to address increasing Investor Interest

"The strategy’s quality orientation toward companies with strong balance sheets, high returns, sustainable cashflows and leading ESG profiles helped during the turbulent times", ClearBridge Investments

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The relevance of Social Bonds and ESG Communication. The “S” of ESG.

Social Bonds, Social Bond framework and Social Bond Principles. The "S" of ESG

ESG Impact and Sustainability Communication

Engage your investors with sustainability communication on your ESG improvements

Key components of corporate sustainability

Execute your sustainability efforts focusing on the following four components

The importance of communication in sustainability & sustainable strategies

Sustainability and the importance of Supply Chain

Importance of Green Supply Chain™

3 Reasons to have a Sustainability Strategy

Business entities should contribute to the Green economy

All about Green Bonds

What are Green Bonds

Who buys Green Bonds?

It is imperative to enable a sustainable supply chain in order to meet your sustainability commitments and ESG targets. Read more.