Answers to common questions that our clients are asking.

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How do I know which ESG Framework is right for my company?

While regulatory requirements and enforcements vary around the world, it is universally expected that mandatory disclosures will become increasingly prevalent. That’s why it’s important to start benchmarking performance now – ideally against a globally recognized framework like the World Economic Forum’s Stakeholder Capitalism Metrics. This will protect your company’s market position while local regulations continue to evolve – and will also give you a robust model for mitigating compliance risks.

Why aren't surveys sufficient for outcomes measurement?

Surveying beneficiaries is a great first step, however, they can't offer the deep insight that you need to make service decisions or secure funding. The issue with surveys is that they ask questions at a single point in time, making it hard to prove long-term impact and often manual which can lead to inconsistencies that compromise the integrity of the data.

What does ESG stand for?

ESG stands for Environmental, Social, and Governance.

How do I know when my company is ready to report on ESG?

Starting your reporting journey today is one of the best ways to show your commitment and dedication to ESG transparency standards, and there's no need to wait for perfection before beginning - metrics can always be improved over time. Plus, there is likely a great deal of relevant work your company is already doing. ESG is about making these activities visible to the market. Socialsuite helps you find those quick wins, then we talk about how you can progress and improve your ESG credentials over time.

What is the definition of ESG?

ESG is a set of criteria used to evaluate a company's performance in areas related to environmental sustainability, social responsibility, and corporate governance.

My investors don’t care about ESG. Why should I start reporting?

The days of investors focusing solely on financial statements are long gone. If you want to attract retail investors, institutional investors or fund managers, you’ll need to meet ESG criteria. Society, investors, consumers and employees are expecting companies to grow in a financially sustainable, yet environmentally viable way. ESG isn’t just used by socially conscious investors to screen companies prior to investing, it’s also looked at by customers, consumers and employees when they’re making decisions about what companies to get behind. ESG is a global priority, so if ESG is not a priority for your business, ask yourself why.

Why is ESG important for investors?

ESG is important for investors because it helps them to assess a company's overall risk and potential long-term value, taking into account not just financial factors but also social and environmental considerations.

Does my company need to report on ESG?

Action on ESG is essential for companies seeking investor dollars, regulatory approvals, and the social license to operate. As companies, large and small, face increasing demands from their stakeholders, ESG disclosure is officially no longer a ‘nice to have’. Under growing pressure from government regulators, investors, customers and employees; companies must look to understand the economic realities of ESG – and its impact on people, planet and prosperity.

What are the various ESG frameworks and how are they different from each other?
  • The World Economic Forum (WEF) ESG framework - This framework covers a range of ESG factors, including climate change, biodiversity loss, social inequality, and technological change. It provides guidance on how companies can integrate ESG issues into their business strategy and operations, as well as how investors can incorporate ESG factors into their investment decisions.
  • The Global Reporting Initiative (GRI) - This is a widely used framework that provides guidelines for sustainability reporting. It covers a broad range of ESG issues, including governance, human rights, labor practices, and environmental impact.
  • The Sustainability Accounting Standards Board (SASB) - This framework focuses on industry-specific ESG issues, providing guidance on the ESG factors that are most material to each industry.
  • The United Nations Sustainable Development Goals (SDGs) - This framework consists of 17 goals that aim to promote sustainable development globally, covering a broad range of issues from poverty to climate change.
  • The Task Force on Climate-related Financial Disclosures (TCFD) - This framework provides guidance on how companies can disclose their climate-related risks and opportunities, with a focus on financial impacts.

Each of these frameworks offers a unique perspective on ESG issues and can be used by investors and companies to guide their ESG practices. Ultimately, the choice of framework depends on the specific needs and goals of the user.

How much investment do pension funds, hedge funds, private equity funds and VC funds direct into ESG?

According to the Global Sustainable Investment Alliance, as of 2020, total assets managed under responsible investment strategies reached $35.3 trillion globally, a 15% increase from 2018. A survey by the CFA Institute found that 72% of global institutional investors consider ESG factors when making investment decisions.

How do ESG criteria differ from traditional financial metrics?

ESG criteria take into account non-financial factors such as a company's impact on the environment, treatment of employees, and ethical business practices, while traditional financial metrics focus primarily on financial performance and profitability.

What are some common ESG factors that investors consider?

Some common ESG factors that investors consider include a company's carbon emissions, labor practices, diversity and inclusion policies, board structure, and executive compensation.

How can investors incorporate ESG factors into their investment decisions?

Investors can incorporate ESG factors into their investment decisions by using ESG ratings and rankings, engaging with companies on ESG issues, and investing in ESG-focused funds and products.

What is social outcomes measurement?

When we talk about social outcomes measurement, we refer to an evidence-based process that assesses how well a program has achieved its intended results.

What is the difference between ESG integration and ESG screening?

ESG integration involves considering ESG factors alongside financial metrics in the investment process, while ESG screening involves using ESG criteria to exclude certain companies or industries from the investment universe.

What is impact investing?

Impact investing is an investment strategy that seeks to generate both financial returns and measurable positive social or environmental impact.

Can ESG investing generate competitive financial returns?

Yes, ESG investing can generate competitive financial returns, as companies that perform well on ESG criteria may be better positioned for long-term success.

Is ESG investing only for socially responsible investors?

No, ESG investing is not only for socially responsible investors. It can be a valuable strategy for any investor looking to manage risk and maximize long-term returns.

Can companies with poor ESG performance improve their ESG ratings?

Yes, companies with poor ESG performance can improve their ESG ratings by implementing policies and practices that address environmental, social, and governance issues.

How do ESG ratings agencies evaluate companies?

ESG ratings agencies evaluate companies based on a range of factors related to environmental, social, and governance issues, using both quantitative and qualitative data.

How can companies improve their ESG ratings?

Companies can improve their ESG ratings by implementing policies and practices that address environmental, social, and governance issues, and by being transparent and communicative about their ESG performance.

Can ESG investing lead to positive social and environmental outcomes?

Yes, ESG investing can lead to positive social and environmental outcomes, as investors can direct capital toward companies that are making a positive impact in these areas.

What is the relationship between ESG and sustainable investing?

ESG is a key component of sustainable investing, which seeks to generate long-term value while also promoting social and environmental sustainability.

Are there any regulatory requirements related to ESG?

There are a growing number of regulatory requirements related to ESG, particularly in Europe, where the EU has established a taxonomy for sustainable finance and other ESG-related regulations.

What is the role of engagement in ESG investing?

Engagement is an important part of ESG investing, as investors can use their influence to encourage companies to improve their ESG performance and address sustainability issues.

How many public companies are actually disclosing ESG metrics?

According to a study by the Governance & Accountability Institute, which analyzed the S&P 500 companies, the percentage of companies publishing sustainability reports rose from just 20% in 2011 to 90%+ in 2022. Furthermore, a survey by the CFA Institute found that 92% of global institutional investors integrate ESG factors into their investment analysis and decisions.

How is outcomes measurement different to ESG?

ESG (Environmental, Social, and Governance) factors are used to evaluate a company's sustainability and social impact, and are primarily focused on assessing the risks and opportunities associated with a company's operations, reputation, and long-term financial performance. ESG factors are typically measured through disclosure frameworks and sustainability reports, and are used by investors and other stakeholders to evaluate the sustainability and social impact of companies.

Outcomes measurement, on the other hand, is a broader concept that refers to the process of evaluating the effectiveness of programs or interventions in achieving their intended outcomes. Outcomes measurement is commonly used in the context of social and environmental programs to evaluate the impact of initiatives such as poverty alleviation, education, healthcare, or environmental conservation. Outcomes measurement focuses on evaluating the actual results of programs, such as improvements in health, reductions in poverty, or increases in environmental conservation, and is typically measured through data collection and evaluation methodologies.

While ESG factors and outcomes measurement are related in that they both evaluate the social and environmental impact of organizations, they are fundamentally different concepts. ESG factors are used to evaluate the sustainability and social impact of companies, while outcomes measurement is used to evaluate the effectiveness of social and environmental programs.

What are some considerations a non profit needs to take into account if it wants to track outcomes?

If a nonprofit organization wants to track outcomes, it needs to take several considerations into account. Here are a few:

  • Establish clear goals and objectives: The nonprofit needs to clearly define what it wants to achieve and why it matters. This will help determine the metrics to track and the data to collect.
  • Develop a theory of change: A theory of change is a roadmap that outlines the steps the nonprofit will take to achieve its goals. It helps to clarify the inputs, activities, outputs, outcomes, and impact of the nonprofit's programs and initiatives.
  • Select appropriate outcome measures: The nonprofit needs to select the most appropriate outcome measures to track progress towards its goals. These measures should be relevant, reliable, and meaningful to the nonprofit's stakeholders.
  • Determine data collection methods: The nonprofit needs to determine the best methods for collecting data, whether through surveys, interviews, focus groups, or other means. It should also consider how frequently data will be collected and who will be responsible for collecting it.
  • Establish a system for data management and analysis: The nonprofit needs to establish a system for managing and analyzing the data collected. This may involve creating a database, using data visualization tools, or hiring a data analyst.
  • Use the data to inform decision-making: Finally, the nonprofit needs to use the data to inform its decision-making and improve its programs and initiatives. The data should be regularly reviewed and evaluated to identify areas for improvement and determine what is working and what is not.

Why can't I just use a survey tool to track ESG or outcomes?

While survey tools can be useful for collecting data, they may not be sufficient for tracking ESG or outcomes. Here are a few reasons why:

  • Limited scope: Surveys often have a limited scope and may not capture all of the relevant data points for tracking ESG or outcomes. For example, ESG factors are typically evaluated through a combination of quantitative and qualitative data from a variety of sources, including financial reports, sustainability reports, and news articles.
  • Selection bias: Surveys may be subject to selection bias, which occurs when certain groups of people are more likely to respond to the survey than others. This can skew the data and make it difficult to draw accurate conclusions.
  • Difficulty in measuring change over time: Surveys may not be able to capture changes over time or long-term trends. For example, if a nonprofit is tracking outcomes over multiple years, it may need to collect data using consistent methods to ensure that the data is comparable over time.
  • Lack of rigor: Surveys may lack the rigor needed to ensure that the data is reliable and accurate. This can lead to inconsistencies in the data and undermine the credibility of the results.
  • To track ESG or outcomes effectively, nonprofits may need to use a combination of data collection methods, including surveys, interviews, focus groups, and data from other sources. They may also need to develop a robust system for data management and analysis to ensure that the data is reliable and meaningful.

What is the difference between an Output and an Outcome?

Outputs are the services, programs and support your organization provides - the activities (or the what) that enable outcomes. Whereas Outcomes refers to the changes that happen as a result of your program, activity or service. They are mostly characterized as a change in circumstance, knowledge, skill, behavior or attitude.