Pressure is mounting for businesses that haven’t yet enhanced the transparency and quality of their environmental, social and governance (ESG) data. Better data quality is becoming an important tool for organizations to formulate effective sustainability strategies while also attracting new investors.
As frameworks such as the United Kingdom’s Sustainability Disclosure Requirements and the European Union’s Corporate Sustainability Reporting Directive come into effect, companies are being urged to consolidate their sustainability data to navigate this regulatory landscape.
Sweep, a sustainability data-management platform, helps financial organizations and companies achieve their sustainable business goals by managing increasing disclosure requirements. Rachel Delacour, company CEO and cofounder, shared her views on ESG ratings and whether rating companies need to be regulated.
On how regulation affects ESG ratings, Delacour explains that regulations influence strategies made by companies. As regulatory frameworks evolve, she expects that their influence on ESG ratings will increase and in turn, drive companies toward more accountability and transparency in their sustainability policies. She also expects that improved data quality will help organizations craft sustainability strategies that deliver tangible benefits to their businesses while also aligning with their social and environmental goals.
High-quality data on sustainability helps companies identify areas that need improvement in their business’s operations. This is in addition to empowering business leaders to make informed decisions.
On data-quality improvements influencing investment decisions, Delacour explains that improving the quality of sustainability data affords investors more clarity, particularly on ESG performance. It also increases transparency, which bolsters investor confidence in a company’s achievements and plans. Studies from Harvard Business School have shown that companies with strong sustainability practices perform significantly better in comparison to their peers in the stock market.
With regard to interacting regulations, Delacour advises that a robust system to gather comprehensive data on sustainability be established. Once this is done, businesses can carry out thorough evaluations of their carbon footprints, which allows them to monitor their value chain in real time then gather relevant data.
Delacour also underscores the importance of implementing a system for third-party verification of sustainability data, noting that this ensures transparency and reliability. This is in addition to offering assurance to stakeholders and enhancing credibility.
As the regulations continue to change, Delacour advises that companies consolidate their sustainability data in one source to make it easier to respond to any changes made in the future. She also highlights the importance of partnering with consultancies that can offer insight into reporting timelines, necessary steps in compliance and any associated risks.
It would be interesting to hear what other companies such as Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) see as the current gaps in ESG rating that need to be addressed.
NOTE TO INVESTORS: The latest news and updates relating to Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) are available in the company’s newsroom at https://ibn.fm/ATBHF
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