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AVG Group Sarl,  a climate change investment firm in Norway, recently engaged with Rio to to better understand their ESG performance and areas of improvement. Together undertaking and assessment of each company in AVG’s portfolio against material ESG issues using a customised methodology aligned with SASB and WEF frameworks.

The final report of the assessment is a summary that showcases the positive environmental impact that one investor has when investing in AVG’s fund. The report also provides visualisations of environmental data, demonstrating the direct impact of individual investment through key metrics such as carbon emissions saved, homes powered, and equivalent trees planted.

Taking time to sit down with Rio recently, Karl shared his insights and expertise to contribute to Rio's data collection guide for financial services, titled ESG Due Diligence, Compliance, and Voluntary Reporting. You can find more insights, actions and tips in the full guide.

Why collect ESG data for pre-investment?

Assessing environmental, social, and governance (ESG) performance is becoming a critical part of the due diligence and voluntary reporting process for investment, financing, and insurance decisions. There are many connected reasons for the rising importance of ESG reporting and performance, including:

• the shift to consider ESG in the financial sector;
• a positive correlation between ESG and financial performance;
• record investment into ESG funds;
• the increasing pressure from regulators to report on ESG decision making; and
• the risks associated with non-disclosure and non-compliance.

What began in the 1960s as a minuscule vote of financial conscience and remained that way until around a decade ago, has now emerged as a mighty force: ESG investing. In growing numbers, investors now act on ESG, even as they keep close watch on their returns. Indeed, the potential for financial choices to positively impact the planet matter more than ever and today’s worldwide markets are waking up to this reality.

In America, 2021 investment giant BlackRock has launched its U.S. Carbon Transition Readiness ETF. And globally, ESG funds are projected to approach £1 trillion by 2030. That would surpass £4.1 billion invested for all of 2018 by close to 200 times. 

Now the question is: How can the EU encourage its financial market participants and financial advisors to invest in sustainable options? This is where Sustainable Finance Disclosure Regulation (SFDR) enters. SFDR is a solution put forward by EU’s High-Level Expert Group (HLEG) on sustainable finance.

COP26 backstory

The COP26, officially the 26^th Conference of the Parties, will take place in Glasgow from the 31^st of October to the 12^th of November 2021. The 197 parties to the UNFCCC (United Nation’s Framework Convention on Climate Change) will meet to accelerate the progress on the goals of the 2015 Paris Agreement. COP26 will focus on four main goals:

• Secure global Net Zero by mid-century and keep 1.5 degrees within reach
• Adapt to protect communities and natural habitats
• Mobilise finance
• Cooperate to deliver such improvements.
  
  

Climate Finance: what is it, and why is it central to COP26?

CDP (formerly the Carbon Disclosure Project) is known as the gold standard for environmental disclosure and runs the largest environmental reporting system globally. Over 590 investors with over US$110 trillion in assets specifically request companies to disclose through the CDP framework. The CDP framework is used by investors, companies, government bodies, cities, states and regions across the world.

What is ESG reporting?

ESG reporting is the process of measuring, aggregating, and disclosing data related to environmental, social, and governance principles. 

What is GRESB?

The Global ESG Benchmark for Real Assets, known as GRESB, is an investor-led organisation that assesses and benchmarks the environmental, social, and governance (ESG) performance of real estate and infrastructure entities. 

I recently had the pleasure of hosting a panel discussion at the Arab Federation of Exchanges, Virtual Saudi Conference 2021. I was joined by four fantastic panellists:

Founded in 2011, the Sustainability Accounting Standards Board (SASB) sets standards that establish, guide, and improve the disclosure of financially material sustainability information by companies to their investors. 

GRI is one of the most commonly used ESG (environmental, social, and governance) reporting frameworks. But like most ESG frameworks, it can be complicated and confusing, especially for those who are new to the world of sustainability reporting.