Environmental, social and governance (ESG) scores measure your company’s exposure to and management of financially relevant risks and opportunities. Continually developing and refining your ESG risk management with a view to enhancing your ESG score is crucial: a higher ESG rating could make your company more attractive to potential investors and support the organization in effectively managing drivers of long-term success.
ESG rating providers can give companies average, below or above-average ESG scores. For example, MSCI’s ratings are:
The options available on your journey to becoming an ESG leader may have associated costs and there are a wide range of issues you could potentially prioritize – from climate, human rights across supply chains, to board diversity. There may also be a breadth of levers you could potentially pull to mitigate each ESG risk. The multitude of ESG choices means finding the most efficient route to improving your score may not be immediately clear.
In this insight we look at three steps to clarifying those ESG risk management decisions likely to boost your ESG score most efficiently.
WTW’s recent ESG Global Risk Managers Survey showed three quarters of respondents (74%) said improving their organization’s ESG score is a core focus for their businesses. At the same time, only 17% have documented targets with clear milestones for ESG risks.
Perhaps the very first step for some organizations on improving their ESG score is embracing ESG as a risk issue. This allows risk professionals to lead the ESG agenda, applying the same risk management approaches you’ll already be using to manage other areas of risk and opportunity to ESG. The steps listed above will provide you with a relatively simple framework to help develop a sound ESG strategy and actions to achieve this. It can also create useful ESG analytics and reports for the board, the rest of the company, as well as external stakeholders including insurers and investors.
For specialist expert consulting support to identify efficient paths to boosting your ESG score, please contact us.