Investor ESG Toolkit

ESG | Financial Services

BSR often gets questions about ESG ratings and rankings from member companies, but in fact, ESG ratings are only one part of the toolkit for a responsible investor. Investors have a portfolio of different options to assess whether companies they invest in are compliant with their responsible investment policies, and how to exercise active ownership towards desired behaviors when they are not.

Over the last years, investors have become more active and vocal in terms of ESG management. At the same time, new regulations like the EU Taxonomy and stakeholder pressure are creating the need for investors to demonstrate their commitments as responsible owners. Trends are going in the direction of an integrated 360 perspective, considering the entire spectrum of an investee company’s activities and business value chains to understand them holistically rather than on independent topics.

In the light of this, only looking at ESG ratings becomes quite one-dimensional. Ratings often serve as a starting point for an investment analysis, to help benchmark a company against peers, identify leaders and laggards or get a general sense for the ESG landscape within a given sector. But ultimately, ratings are just one input in a larger analysis process; below follows more examples of what investors are looking for and expecting from portfolio companies.

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