ESG
Advising executives and projects to define a responsible and complying ESG strategy
Our Aphorism
We advise and create ESG strategies for projects in need of applying sustainable frameworks.
Each of the 7 ESG strategies has its framework and needs to be respected and applied depending on the industry, market, jurisdiction, business plan, and the conditions with governments, stakeholders, and capital markets engagement.
Values First
Negative screening based on a specific set of values
Value First
Leveraging ESG factors to maximize returns
Impact
Creating a positive environmental impact
Thematic
Stand to gain from long-term standards
Integration
Efforts to integrate aspects of ESG
Shareholder Engagement & Advocacy
Engagement from shareholders in such as executive
compensation and approaches to climate change
Minimum Standards
Applying existing principles, such as the Guiding
Principles of Business and Human Rights
The 7 ESG Strategies in our DNA
Regulation on ESG performance and corporate disclosure
The interest in ESG and sustainable investment has been growing. The ESG-mandate investments have also motivated policymakers to add more policies and regulations into the universe of ESG and sustainable investment.
ESG and financial performance
Financial materiality is a measure of the significance of the monetary sum in a company's economic context. ESG materiality refers to the significance of an ESG factor in its effect on a company. The struggle for many executives is to understand the ESG strategies they need, as companies tend to be heterogenous across industries, jurisdictions, and markets.
Companies and executives who manage to invest in the appropriate ESG strategy have shown an overall higher financial performance and easier access to funding, key partners, JVs, and receiving government support.
Asset pricing models typically use some variation of discounted cash flow to determine the current price of an asset. The discount factor is determined by the risk associated with the asset, where higher risk means a higher expected return and, as such, a more significant discount factor. Incorporating ESG risks into the calculation involves adjusting the risk basis in traditional asset pricing models.
The growth of sustainable investment
The positive relationship between risk and return drives investment decisions and strategies. Measuring risk on historical performance data has always been the norm of each executive and investor's analysis. ESG has been missed in investment analysis as it's been hard to measure.
As regulations and demand for clarification have grown, the definition of ESG risk management has become much clear and applicable to financial modeling, value creation, and the foundation for sustainable investment.
