Hosted by Rosemary Lapka of the GSC and Louis Coppola, GSC Board Member and Co-Founder & Executive VP of the Governance & Accountability Institute (G&A)
This conversation is about how reverse engineering ESG Investor Datasets is an effective tool that can help to inform a strategy to improve your ESG supply chain policy. The work at G&A focuses particularly on providing advice to corporate and investor clients related to ESG sustainability strategy, disclosure/reporting, investment, and performance. Lou Coppola is the Chair of the US SIF- Social Investment Forum – Company Calls Committee (CCC), which serves as a resource to companies by providing a point of contact into the sustainable investment analyst community and is an active NYSSA- New York Society of Securities Analyst, Sustainable Investing Committee steering member.
The G&A Institute was founded 12 years ago with the concept of helping companies do the right thing for the right reasons. They operate at the intersection of ESG issues, the capital markets, and publicly traded companies. With reputations and evaluations being increasingly impacted by ESG factors, G&A helps companies identify material ESG issues and helps companies to proactively measure, manage and disclose on these issues in a standardized way. The G&A Institute serves as the data partner for the Global Reporting Initiative (GRI) in the United States, United Kingdom and The Republic of Ireland. In this role, they collect and analyze every sustainability report published by companies headquartered in these countries and publish reports on reporting trends to create a greater awareness of best practices in sustainability reporting and sustainable investing.
To identify and extract ESG data points that investors use to assess supply chain, sourcing and procurement policies, G&A conducted a study evaluating the data points collected by 4 respected and often-cited sources that feed the capital market: Thomson Reuters Eikon ESG Data, Bloomberg ESG Dashboard, MSCI ESG Research, and Sustainalytics ESG Research. What they found was that up to 30% of the data points were inaccurate or incomplete because most of the time, the company itself did not disclose their activities in a standardized or easily accessible format for the analysts at these organizations to identify. This lack of standardized ESG disclosure negatively influences the company’s ESG investor profile. The analyst helps to identify how the capital markets and investors assess company’s supply chain policies and identifies best practices. The primary focus of the study examined the subset of ESG data points related to supply chain procurement, purchasing policies and codes of conduct.
G&A grouped the various providers ESG Data points and identified 6 key stages of supply chain policy ESG integration:
Stage 1: Commitments (Environmental, Social, Governance)
Stage 2: Target Setting
Stage 3: Monitoring and Reporting
Stage 4: Engagement and Training
Stage 5: Systematic Consideration and Incentivization
Stage 6: Termination for Non-Compliance
These stages are often done in a continuous cycle. Some of these stages may also overlap. For example, companies should go back to review their commitments each year and improve them based on engaging with stakeholders, evaluating what has become more important to society and customers, and they may set new targets and expectations.
By including specific language and data identified in each of these categories data points, it will provide a more accurate picture of a company’s policies and practices and make it easier for ESG Data Providers’ analysts to assess the company, leading to improved investor ratings in these areas. This is the information ESG data providers are looking for when they go through CSR or other company reports that is then input into their evaluation databases.
Human rights and employee safety policies are examples of key data points that are weighted and evaluated based on how they meet recognized standards and conventions as set forth by policy leaders such as the UN’s Sustainability Development Goals and the International Labour Organization (ILO). As a UN agency that sets internationally recognized standards on human rights, the ILO’s 1998 declaration on fundamental principles and rights at work set out 8 core conventions whose principles are binding on all ILO-member states. As several of these minimum labor rights are not currently achieved within international supply chains, especially in the developing world, it’s increasingly common to include codes of conduct based on these ILO minimum standards into contracts with suppliers.
Click on the video to continue learning more about
- What information should go into reports and how to standardize that policy language disclosure
- How to highlight your policies so that your ESG investor data profile is accurate and complete
- Suggestions on how to implement the 6 stages of supply chain policy ESG integration
- Other tools and resources that will help companies design world-class ESG supply chain tools policies
For more information about G&A Institute or if you have any questions for Lou, you may reach out to him directly at email@example.com or visit their websites: www.GA-Institute.com | www.Accountability-Central.com | www.SustainabilityHQ.com