How Should We Engage With Investors on Sustainability?

In its report "Change the Conversation: Redefining How Companies Engage Investors on Sustainability," nonprofit Ceres provides some guidance on how companies should best engage with their investors on the issue of sustainability. While almost half of the 600 largest US public companies communicate with investors about environmental, social, and governance (ESG) issues, according to Ceres, they could be doing a much better job of it. To that end, Ceres offers a set of nine recommendations "to guide companies toward more meaningful and effective investor engagement on ESG issues." What is the key message? Don't "fall into the trap of positioning sustainability as the 'right thing to do,' without making the connection to the business case." And make the business case for sustainability by tying it to financial performance and demonstrating that it can drive business value. Whether or not you buy into the whole program, you may still find Ceres' perspective and examples provided helpful in guiding your engagement efforts.

According to Ceres, a quarter of the dollars invested in the US is now ESG investment, raising the stakes on sustainability. Likewise, companies have increased their commitments to ESG. Ceres research shows that, among that 600 largest public companies, "nearly two-thirds have commitments to reduce greenhouse gas emissions, half are actively managing water resources, and nearly half are now actively protecting the human rights of their employees."

In addition, a number of respected academic and business sources confirm that, in light of risks arising out of climate change and similar issues, a "focus on a sustainable business strategy can provide a competitive advantage in stock price, cost of capital and operational performance. These trends underscore the link between ESG and financial performance and further demonstrate that those issues once considered extra-financial are, in fact, material financial risks and opportunities impacting the bottom line."

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Find the report here.

 

 

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