UAE: According to Sandeep Raghuwanshi, CEO, Bizness Analytics who is all set to launch region’s first environmental, social, governance aka sustainability-related (ESG/sustainability) reporting toolkit in the UAE, the most commonly asked question about sustainability strategy has been – is it a financial trade off?”
“The short answer is No. “
“A sound, thoughtful sustainable strategy not only is profitable in conventional sense of shareholder value, but also is a key driver for long term profitable returns by aligning company’s shareholder values with broader societal values.
Corporate accountability and value creation through sustainability reporting
In today’s disruption prone business environment and ever shortening corporate lifespans, the board and management need to demonstrate a comprehensive strategy and actionable approach to all the material risks and opportunities facing the company. And these risks and opportunities are not just operational in nature, but also environmental and social. Investors demand companies’ management to credibly demonstrate a sophisticated and nuanced risk management approach that is research based and fact oriented.
The approach to sustainability is deep and transformational. It entirely redefines our understanding of corporate accountability, risk management and value creation.”
The next big question asked is why sustainability reporting?
The purpose of sustainability reporting is to answer the following simple question: whether the company’s present business model builds more value than it consumes or destroys.
“The decision of an organization to commit to sustainability, essentially means that the board, the leadership and the management are making a conscious decision to be more transparent in their business, and expansive in their sustainability efforts, more specifically on indicators which are directly related to the broader environmental and social agenda.”
Five reasons why sustainability makes good business sense for your organisation
Sustainability reporting improves shareholder returns
As per UN PRI’s annual report 2018, US$60 trillion of actively managed equity and fixed income assets currently use responsible investment strategies. These investors reward companies that perform well on ESG parameters and identify and avoid or penalize the companies that pose sustainability risks with higher risk premium.
A recent report by MSCI looked at more than a decade of stock performance and established beyond doubt that companies with high ESG scores perform better in terms of stock returns.
Sustainability reporting enables continuous innovation and reinvention
Peter Drucker once famously said that you can’t manage what you can’t measure. Sustainability reporting requires companies to measure and report a wide range of metrics and KPIs that deal with their environmental footprint, social policies and impact, and their handling of opportunities and risks. This exercise not only generates more data and insights but also gives a structured approach to quantify non-financial data in financial terms and thus enables more effective and confident decision making.
It is well established that the disconnect between true value and current cost of natural resources like water or air results in “risk blindness” for businesses. With current input costs, management finds it hard to justify making investments in more innovative and sustainable technologies. Once the true cost is established by way of pricing all the risks associated with the resources, the management finds themselves in more persuasive position.
Sustainability reporting helps senior management understand their operating environment better
Sustainability reporting begins with a comprehensive mapping of company’s stakeholders. These not only include the conventional stakeholders such as investors, board, employees, customers, suppliers but also includes non-conventional stakeholders such as local community, NGOs, academia, environmental and social groups etc. Each stakeholder is then evaluated for its influence and dependency on the company for their impact assessment. Each stakeholder has unique perspective, interests and concerns. This presents both opportunities and risks. Stakeholder mapping exercise provides company with a comprehensive ground to build a sound and actionable innovation and risk management strategy.
Sustainability reporting for better risk and opportunity analysis
Stakeholder engagement process is opening door for continuous dialogue with actors in company’s operating environment. The company collects stakeholder feedback and concerns, understands the issues important to them, incorporates them in operating strategy and finally closes the loop by reporting back to the stakeholders the actions taken and the results achieved. This process of two-way interaction enables the leadership to identify risks much before they materialize and tap into opportunities while they are still at horizon thus creating a benign operating environment for long term sustainability.
Create stronger investor relations
Sustainability Report is increasingly becoming an important element of investor engagement.
Today we live in an information-rich and information-hungry world where people, especially those who are active in the capital markets, want to get access to a vast quantity of information for their decision making. While all companies are able to provide financial information readily, the investors today demand large amount of non-financial information to derive insights into the future performance of the company and of their investments.
The non-financial information available through news reports, social media, blogs, videos, expert opinions or controversies are of uneven quality, different formats, lack consistency and reliability which makes it difficult to arrive at definitive judgements of their impact on financial performance.
Sustainability reporting provides this non-financial information in a structured, reliable and consistent manner that could provide meaningful signals and indicators on future performance of the company.
About Bizness Analytics
Bizness Analytics is based in Dubai International Finance Centre, DIFC in Dubai and serving several international clients, including names like NIKE.
Looking ahead, Bizness Analytics will create comprehensive sector specific tools for travel, healthcare, hospitality, retail and tourism industry and also work towards creating awareness of sustainable business using big data & analytics.
About ESG Robo Advisor
“Our aim is to assist, guide and provide companies with all required tools to take ESG mainstream. ESG Robo Advisor is developed in our own design and innovation lab that allows an organisation to create a long term and sustainable environment and stakeholders base that works together to make this world a better place.
- ESG reporting or Sustainability reporting
- ESG Investing
- Materiality Assessment, Stakeholder Mapping, ESG Benchmarking
Media Contact: Balqis Hindash
Email: Prexpertuae@gmail.com
Mobile Number: 97150 72 86 803
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