More investors are prioritising environmental, social and governance measures

Refinitiv finds that 63 percent of companies have a policy to reduce emissions. 

Socially responsible investing is a growing trend and investors are increasingly looking for Environmental, Social, and Governance (ESG) data to ensure they are mitigating risk and preserving capital, a report by Refinitiv has found. 

The increasing focus on ESG by investors and the movement to regulation around sustainable finance means asset managers are needing more data and analytics than ever before to build sustainability into their investment strategy.

ESG refers to the sustainability and ethical impact of an investment in a company or on the broader society. 

There is growing evidence that more companies believe that there has been an increase in the importance of ESG factors in Mergers and Acquisitions (M&A) activities. And investors are increasingly demanding companies to prioritise ESG measures and factors.

After all, M&A activity can present synergistic opportunities and such deals are prone to several risks, including potential losses associated with withdrawn or terminated transactions, volatility in company valuations, credit rating downgrades and other financial and legal consequences. 

Refinitiv, which is a global provider of financial markets data and infrastructure, released a report that explores the trend in corporate emissions and progress on recycling, supply chain risk, and water efficiency. 

The company found that 63 percent of companies (up from 56 percent five years previously), in their ESG database, have a policy to reduce emissions, but only 35 percent have specific reduction targets. In addition, the average company has a recycling ratio of 63 percent, but only 29 percent of companies actually report on this metric.

With the 2019 theme being #BeatAirPollution, the report begins by looking at emissions and CO2 production to answer the question which companies, industries, and countries are positioning themselves for success in the transition to low-carbon economies. It then turned to waste, water, and the impact on biodiversity to see which nations are leading the way with recycling and protecting wildlife. 

The report found that between 2014 and 2019, there has been a 25 percent increase in companies with water efficiency policies and 34 percent more companies setting specific water efficiency targets. Some key highlights from the report show that Japan, Europe, and Africa & Middle East have the highest percentage of companies reporting on target emissions. Asia is the region with the highest average CO2 emissions per company.


Source: Refinitiv
 

About 78 percent of companies have resource reduction policies, however only 30 percent are putting tangible targets in place, and only 26 percent have both. Most notable is the top five industry groups in terms of percentage of companies with policies on emissions; namely: automobiles & auto parts, food & drug retailing, telecom services, chemicals, and transportation. 

 

Source: Refinitiv