27 May U.S. corporate sustainability continues to be a key focus for investors
Corporate sustainability ratings have continued to increase in the last year as investors place further pressure on corporate leaders to enhance their environmental, social and governance (ESG) performance and with authorities discussing implementing stricter disclosure measures.
Investors in the US are requesting more details from businesses on everything ranging from carbon emissions to diversity in the boardroom in a mounting belief that businesses focused on performing well on ESG issues translates into better financial performance in the long term. To measure and establish a ranking system for business efforts, several data providers measure corporate disclosures along with other data sources. Investors can use these details as an insight for their analysis before determining whether to invest.
The latest rankings produced by Refinitiv based on annual reports for 2020 indicates the average ESG score for US businesses with a market cap exceeding $5 billion has increased from 42.8 in 2019 to 44.2. The score ranges from 0 to 100, with the higher scores representing a stronger performance on ESG-related measures and minimal negative events related to the business.
Fionna Ross, the senior ESG specialist at Aberdeen Standard Investments explains that throughout this year, they have received multiple enquiries from US-based corporates requesting support as they focus on delivering their first sustainability reports.
The pressure on businesses to disclose additional information regarding sustainability measures is rising. For example, the International accounting organisation, the IFRS Foundation, has announced plans to deliver specific rules to manage company disclosures of risk related to climate change. Policymakers and regulators in the United States are looking to restructure local disclosure rulings.
Data generated by Refinitiv indicates that consumer discretionary, industrial and technology businesses in the United States recorded the highest ESG scorings, while those operating in the mining industry were lagging. US businesses average school was slightly lower than its European counterparts, who recorded an average score of 58 last year, according to Refinitiv data.
Earlier this year the US Securities and Exchange Commission stated that it intended to understand exactly what climate factors would be included in corporate reports, suggesting the increasing importance of sustainability issues for investors.
Europe was a leader in ESG development, resulting in a more established reported and higher level of adherence to ESG measures. With demand continuing to rise, businesses in the United States will have to shift their attention towards disclosing and managing ESG issues if they intend to compete in the same market for capital. More businesses will likely increase their focus on ESG measures once they begin to acknowledge the financial improvements that are associated with enhanced ESG management.
With the rise of sustainability and investor demand for more focus on ESG, Lewis Davey is opening into the US market. Lewis Davey has recently expanded its business and its sustainability recruitment expertise in the US market.
Whether you’re looking to recruit into your team or looking for a new role in the industry please talk to Sam Rugman. You can book a time directly into Sam’s calendar via this link – https://lnkd.in/dB5jB8q
Lewis Davey USA Recruitment
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