To attract investors, Narva believes that indices and investor survey results will be business critical when it comes to opportunities for companies to attract investments with sustainability profiles. Consequently, information quality will be very important during periods when physical meetings between investors and companies decrease.
As per the Global Sustainable Investment Alliance: since 2012, sustainable investments have doubled globally. Today, they are worth about USD 3 billion. Rapid development occurs in everything from valuation issues to sustainable value creation and climate change minimization. Stock markets increasingly value solutions for sustainability challenges.
New EU regulations for directing capital flow toward sustainable investments also affects stock-exchange-listed companies. Why such regulations? To increase transparency and to ensure that larger proportions of investments cover remediation and operations that counteract climate change.
Recent trends suggest that investors want more and more sustainability data from companies. Investors collect sustainability information from listed companies in various ways such as:
• Indices and rankings based on companies’ reports, e.g., the Dow Jones Sustainability Index, the Carbon Disclosure Project, and the Global Real Estate Sustainability Benchmark.
• Assessments based on companies’ external reports, e.g., annual and sustainability reports and web site pages. Global 100, Ethibel Sustainability, and FTSE4Good are indices based on external reports.
What should companies think about to get the best-possible ranking and to ensure that lack of information does not inadvertently lead to a low assessment? Here are some concrete tips from Narva:
TIP 1: SELECT RELEVANT INDICES
To use sustainability indices successfully, adopt a strategic approach and prioritize indices that are most relevant. Start by identifying indices that current and potential owners and investors are interested in. What indices do your competitors use? Use indices that enable comparability to be able to analyze ways in which the company performs – compared to competitors.
TIP 2: SET ASIDE TIME, BE METICULOUS
Reserve time to complete and correct any survey responses. Check responses against guidelines so that nothing is missing. Knowledge of criteria used in the evaluations can provide better assessments, because often, it’s crucial to specifically provide responses to criteria being assessed. Also ensure that the responses match what you wrote in external reports.
TIP 3: FOLLOW UP RESULTS, WORK LONG TERM
Use results to further develop internal sustainability initiatives. See index content as a benchmark for issues that might be important to work with. Index questions are annually updated to capture the latest trends. For new areas, you might have to develop new processes and start data collection.
TIP 4: YOU GOT A GOOD RATING: SHOW IT!
If you get a good index rating, then communicate it! A press release, social media posts, a sign in the reception area or a cake during a coffee break? And don’t forget your employees: sustainable change must be internally based.
Narva assists many companies in the practical work of reporting on various sustainability indices (several Narva customers are in the top international tier). If you want to know more about how your company should prioritize various sustainability indices and how you can set up the reporting process, don’t hesitate to contact us.
+46 8-599 211 32