Leading investor relations consultancy firm Edison Group has announced the launch of a new series of ESG reports designed to democratise investor access to review companies’ performance and adherence “across the most significant and stringent criteria”.
The reports – collectively called ‘Edison ESG Edge’ – utilise a standardised structure and a “ratified, forward-looking data set of drivers and future performance indicators”, crucial in making companies’ ESG performance easier to discern and to help democratise investors’ access to key markers of success, allowing them to make “more informed investment decisions”.
‘Edison ESG Edge’ will help to solve the challenges investors face in accessing ESG performance data, and will facilitate investor groups obtaining an “all-encompassing report of companies’ financial and ESG drivers”.
In collaboration with data provider Rebalance, ‘Edison ESG Edge’ (fully compliant with the Sustainable Accounting Standards Board (SASB)) begins by analysing data across 10 different “layers” including: strategy, peer benchmarking, ESG SWOT, rebalance scores, environmental performance insight, social responsibility scorecard, socio-political performance, governance scorecard, stakeholder analysis, and ESG Risk and VaR.
The new ESG reporting product then follows up with “in-depth management and employee interviews to test initial hypotheses and mine the narrative behind the data”. The findings are then condensed into a final report with a “strong focus on key ESG drivers, transition opportunities and risks”. Edison’s distribution platform then makes every report available to a global audience of specialist and boutique institutions as well as family offices, wealth managers, retail investors and large institutions.
ESG investing is now a firm feature of mainstream investing, with a recent report by one leading US investment bank finding that flows into ESG funds were up 102% over 2020, and November commitments reaching $47 billion compared with an average of $13 billion in 2019. This upward trend is predicted to continue well into 2021, but access to ESG data is still sparse and at times difficult to assess.
Edison cites investors’ “significant fears over the quality and fragmentation of ESG data” as a driving factor behind the launch of ‘ESG Edge’, and put the ‘greenwashing’ at the very top of their concerns. Assessment of ESG performance has yet to be standardised, and there is a challenge in differentiating true sustainability and what could be merely a green veneer. Many of the data points conceal as much underlying truth as they reveal, Edison warns.
The majority of relevant ESG data is only reaching a “limited proportion of large institutional investors”, which already have the substantial resources and teams of analysts needed to scrutinise such complex data. However, Edison points out that many investor groups – such as family offices and retail investors – are left without the necessary tools to make informed decisions about their investments’ ESG performance.
Neil Shah, Managing Director of Content and Client Strategy at Edison Group, commented on the launch of ‘ESG Edge’:
“While ESG investing is certainly now mainstream most investors do not have access to the level of information they need or the resources to analyse fully ESG data, which is critical for them to make the most informed investment decisions.
“With our Edison ESG Edge reports we address this issue and provide the standardisation of data and the analysis to allow them to accurately assess companies against ESG criteria. Democratising access to ESG data benefits both the companies seeking to prove their ESG credentials as well as the investors looking to commit capital to them, making for more transparent capital markets, which will ensure that, from an ESG perspective, funds flow to the most deserving companies”.