ESG and Sustainable Investment: QCA Report
Moon Executive Search has worked closely with the Quoted Companies Alliance (QCA) over many years, they champion the interests of small to mid-size quoted companies.
The QCA identifies the issues that matter to their members and keeps them informed. QCA interact to build the understanding and connections that help their members stay ahead. The influence QCA has, the influence they use and the influence they grow ensures that QCA members always benefit from the impact of their initiatives.
The QCA have just released a report regarding ESG (Environmental, Social and Governance) detailing the increasing demand for sustainable investment, stakeholder value and long-term considerations. Investors now routinely analyse information on ESG performance with other financial and strategic information to gain a greater understanding of companies’ prospects.
The report states that there is still a lack of proper definition regarding ESG across the business world:
‘Communicating an effective ESG policy really shouldn’t be a burden to small or mid-sized companies. It should be part of telling the story of how the company is run and become an extension of the improved corporate governance disclosure that has been visible with smaller companies on the UK’s public markets over the past several years.’
Here are some of the key messages from the QCA report:
ESG Awareness and Knowledge:
ESG is a familiar concept but can narrowly defined and poorly applied
E (Environmental) is the pillar most customised to sector, G (Governance) is the most entrenched pillar, while S ( Social) is largely focussed on diversity, gender pay gap and KPIs
Investors would like to see more evidence-based metrics
A quarter of companies began to recognise the value of ESG over the last one to two years
Questions for the Board
How far do you understand a comprehensive definition of ESG?
Have you discussed and quantified the value of ESG to your company?
What does ESG mean to all your stakeholder groups?
How does ESG affect your long-term financial performance?
Are you discussing ESG with board and executive colleagues?
With a greater focus on social matters alongside news that ESG funds delivered almost double the returns of non-ESG mandates, both global and domestically; expect to see even greater focus on ESG in the coming years, bringing an emphasis on sustainable, long-term investments that reward thoughtful innovation and ethical solutions.
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