What is ESG ranking?

ESG ranking has gained popularity in recent years. Usually referring to non-financial – Environmental, Social and Governance (ESG) – factors being used as an assessment tool by investors. ESG factors are used to analyse, score, and subsequently rank potential investment opportunities.

This gain in popularity follows a heightening urgency for positive environmental, social, and governance action to be taken. There is a need for businesses to not only make sustainable choices, but to show reliable evidence of their action. This is where ESG ranking comes in.

ESG ranking is based on reporting, performance, and scoring. Reporting involves the data a company discloses relating to ESG factors. Performance shows whether a company is meeting ESG related targets in their desired timeframes. Scoring refers to the assessment and quantification of ESG performance.

ESG Ranking Factors

ESG ranking is broken down into Environmental, Social, and Governance material factors. Material factors are those that impact the financial or operational performance of a company. Environmental factors indicate how your company interacts with nature and the atmosphere. Social factors show how your company interacts with employees, customers, service providers and the community. Governance factors are a reflection of a company’s leadership, audits and compliance, internal controls, and transparency.

Examples of ESG material factors

Source: Ballotopedia

How can I boost my company’s ESG ranking?

The key to beginning the journey of boosting your company’s ESG ranking is to conduct a materiality assessment. This involves aligning the applicable material factors with the relevant data to be reported and achievable performance targets. This will subsequently reflect in your score.

Using waste management as an example

 

From here the practical work begins. Mechanisms can be put in place to reduce waste production at source, separate waste grades to optimise recycling and recovery, ensure that waste is being handled correctly, and subsequently being diverted from landfills. Lessening the demand for environmentally harmful disposal methods is only one of the benefits of diverting from landfill. Greenhouse Gas (GHG) emissions, contribution to deforestation, and energy and water usage can all be decreased.

At Don’t Waste, we track the environmental performance of our clients. We report the cubic metres of carbon dioxide, litres of water, kilowatts of electricity and number of trees our clients have saved in a given period based on the way their waste is managed. Our goal is to boost our clients’ environmental savings by finding innovative solutions to aid in their Zero Waste Journeys. In order to guarantee that performance targets are actually being met, reliable and auditable data needs to be a priority. Don’t Waste’s Proptech Solution affords our clients the ease of instantly available waste management data in various metrics.

ESG cannot be viewed as a list of boxes to check. ESG strategy should be imbedded in the culture of your company by aligning your mission and ethos with ESG principles. Employees and stakeholders can be educated and involved through campaigns and initiatives. Improving your ESG ranking also involves aligning your company to global and regulatory frameworks such as the Sustainable Development Goals (SDGs). Don’t Waste is passionate about not only aligning our company, but also our clients with various frameworks and accreditations including the SDGs (Read: Waste Management Goals and achieving the SDGs).

What are the benefits of boosting my company’s ESG ranking?

Aside from the sustainability benefits of improving your company’s ESG ranking, there are also many other inherent benefits.

A higher ESG ranking is beneficial when investors are evaluating your company. They are increasingly including ESG performance as a criterion. It has been shown that companies that prioritise ESG tend to outperform their competitors. Lower risk can be expected with a higher ESG ranking. Companies with higher ESG ranking tend to be well managed and show better financial performance over time. Regulatory and operational risk can also be mitigated by having a clear and effective ESG strategy.

A high ESG ranking can improve your company’s reputation. As ESG becomes a more popular tool for investors, it is also becoming a consideration of customers in their spending behaviours. Having an ESG strategy and actively working towards more sustainable practices can give you a competitive edge. Attracting a talented workforce is another expected benefit. Potential employees seeing that your company values sustainable practice and having a positive impact is often a motivating factor. ESG performance also includes how you treat your workforce. A high ranking can show potential talent that you value your employees and actively have measures in place to meet their needs.

At Don’t Waste our mission is to protect the environment. We recognize that ESG ranking is the future of integrating environmental, social and governance issues into business. Our waste management system and zero waste strategies are designed to meet each of the three components of your ESG ranking. To find out how, contact us.

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Don’t Waste provides industry leading business intelligence, site management, and waste management services to Property, Retail, Commercial, Industrial and Hospitality industries. Our customers include the world’s leading property management groups. To find out more about our innovative value-added systems and services in onsite waste operations, contact:

Linus Naik- Group General Manager: Sustainability & Business Development (Email: I Mobile: +27 82 552 0675).

Michael Foreman- UK Managing Director and International Business Development (Email: I Mobile: +44 7939 027193).