Investors care about your ESG risks as their own
Investors are obliged to integrate ESG risks in their investment decisions. This is due to fiduciary duty and is specified in the Sustainable Finance Reporting Directive (SFDR) Article 6. Therefore they contract us at sustainAX to help them understand your ESG risks. We have produced a 33 pages ESG risk report and an ESG risk rating for your company that our clients have access to.
When companies talk about sustainability risks, investors often talk about ESG risks. This is the same thing.
The ESG risk Due Diligence of your company is ready!
Your material ESG risks
Material ESG risks are the risks in the fields of Environmental, Social and Governance that are the most significant for a type of activity. To make it practical, we aggregate activities into sectors. When we ESG risk researched your company, we spent time to understand what was the relevant sector for you to ensure we get the right materiality applied. From there we knew what were the ESG risk areas that we should focus on in our next step that was assessment of your ESG risk mitigation. In total we have defined 149 different areas of interest for materiality. In average we consider around 80 areas per company, the difference is explained by the sector specific areas.
Your ESG risk mitigation
We studied all relevant communication from your company for the period we researched for each of the previously identified material ESG risk areas. We read your annual report, investor presentation, sustainability report, green bond framework, second opinion document, policies and other relevant documents that are public. It was up to you through your communication to “convince” us as ESG risk analyst that you have risk mitigating initiatives in place that are effective. When we finished researching your company we assessed the remaining ESG risks and wrote a conclusion about this.
Your ESG Risk Rating
The sustainAX ESG risk rating is a simple indicator for ESG risk level. The real value is the ESG risk report reflecting what kind of ESG risks your company has from an investors point of view. When we talk about your ESG risk here, it is what is remaining after risk mitigation initiatives by your company relative to the general risks from the materiality for your relevant sector. The ESG risk rating in itself is not that important, it is the understanding of the ESG risks that counts in decision processes.
The sustainAX ESG risk rating goes from 0 to 100, where 100 is the least risky. The ESG risk rating of your company is somewhere on that scale.
How to use your ESG risk Due Diligence report?
You can use the sustainAX ESG risk Due Diligence in different ways.
Board and management wake up call
If sustainability risks is not a discussion point in the board of directors or in the executive management, this could offer a kick start to this.
Materiality
As you work your double materiality for the coming CSRD you can be inspired by the ESG risk Due Diligence.
Risk mitigation
As you work with prioritisation of ESG risk mitigating initiatives you can be inspired by the ESG risk Due Diligence.
Sustainability reporting
To ensure you have included all relevant information in your sustainability reporting you can be inspired by the ESG risk Due Diligence.
Access the ESG risk Due Diligence of your company
Included in the access is a meeting with one of our ESG risk research specialists that will explain how we have been thinking when ESG risk researching your company to ensure that you get the most value from the ESG risk due diligence report.
For access, contact Dag at dag.messelt (at) sustainax.com
Dag Messelt
Senior Sustainable FInance Consultant and Certified ESG Analyst
“The big tipping point for me was when I realised that integrating sustainability is beyond any doubt improving the long term risk adjusted returns and hence not a choice, but something that all will start practicing. So companies need help to progress and become more transparent on sustainability and asset managers need help to integrate sustainability duly in their investment decisions. The latter starts with ESG research.”