ESG Performance: Challenges and solutions in quantifying ESG opportunities and risks

The evolution of environmental, social and governance (ESG) criteria as a business management concept has experienced a rapid growth spurt in recent years. From the early days of corporate social responsibility (CSR), to the global drive to combat climate change, to the present scramble to win at diversity and inclusion, the value applied to different ESG issues has shifted. Nonetheless, the basic principle has remained the same: in order to be successful, a company needs to be both doing the right thing, and to be seen to be doing it.

The growing recognition of this fact is most clearly apparent among the investment community. In 2018, sustainable investing assets in Europe totalled $14.1trn, and $12trn in the US1. Across the globe in 2019, 75% of retail and institutional investors applied ESG principles to at least a quarter of their portfolios2. And 52% of ESG investment decisions were motivated by the promise of improved long-term returns.

In this white paper, we outline our perspective on the measurement challenge which is stymying the potential of ESG, and how harnessing and integrating alternative data will address this challenge, enabling business to create shared value for all stakeholders.