July 2020

Newsletters | read time: 4 min

The continuing rise of ESG

Sustainable investing has been the subject of considerable hype in recent years. More significantly perhaps, it has also been the subject of increasing inflows of funds. ESG investing currently stands at an estimated $85tn and is growing.

Some expected the Covid pandemic to burst the ESG bubble, but signs are that the bubble is far from bursting. On the contrary, with companies under considerable scrutiny for the actions taken in response to the crisis, asset managers are also viewing these decisions as a means of assessing the sustainability and resilience of a business in relation to funding.

As we recently argued in the Financial Times, a lot of ESG indicators are proxies for good management. Indeed, companies with strong ESG ratings are increasingly perceived as more competitive, more profitable with have better risk management and lower exposure to systemic failures. In short, as BlackRock’s Larry Fink has stated, “sustainability and climate-integrated portfolios can provide better risk-adjusted returns to investors”.

To capitalise on this growing source of funding, companies need to understand the information and data that investors are seeking. This needs to be properly compiled and verified, covering key information about management quality, risk exposure, growth potential and future viability.

GoodCorporation is working with clients to help them understand their market position in relation to ESG funding and the processes they should have in place to produce verifiable evidence. With more investors demanding independently verified information, such an approach is becoming increasingly important. Full details of our ESG services are on our website. Contact us tor more information

Maintaining integrity for fast-track Covid-19 funding

Since the start of the pandemic, billions of dollars have been sent to developing countries by multilateral development banks (MDBs) and financial institutions to provide the resources necessary to manage immediate health needs, but also to address the longer term economic and social impacts of the pandemic.

With such large sums deployed at speed, it is becoming increasingly difficult to follow the funds from donor to beneficiary and beyond. As such, red flags have been raised around transparency and the risk of fraud.

Our blog explores the steps institutions can and should be taking now. We look at systems for effective remote integrity compliance and how best to build greater capacity locally.

Ensuring that high standards of monitoring are applied is essential. Establishing transparency and accountability will help prevent problems over the longer term. It will also benefit recipient communities. The greater the understanding at a local level that identifying and mitigating corruption brings more economic benefit, the greater the adherence to integrity standards in the future.

Can business lead the way to build back better?

With calls for a fairer and greener recovery growing louder, we discussed the role of businesses in helping to build back better with Jennifer Nadel, barrister, journalist and co-founder of Compassion in Politics.

During the lockdown we have seen a strong sense of compassion awakened by the crisis, with the plight of the more vulnerable members of society a genuine cause for concern.

So as the lockdown ends and companies resume or step-up operations, there is a real chance to ‘build back better’.

Our discussion explored whether businesses can take the lead. It examined how fund managers are assessing the corporate response to the crisis, with the suggestion that funding will become increasingly contingent on how management treat stakeholders. We also considered whether principles of compassion can be introduced into the business model.

Businesses have a significant role to play in re-evaluating their operations to review their impact on all stakeholders and assess whether a new model might emerge. goodblog goodblog

Organisations that understand their culture and are accustomed to decision-making guided by values and purpose will feel confident that even the hardest decisions are well-made.

The pressures of the current situation make this all the more important.

Debbie Ramsay explores why culture matters in a blog that first appeared on the Ethical Reading website.

In the April edition of Ethical Corporation, Michael Pollitt explored proposed amendments to the UK Environment Bill.

These new clauses could impose a duty on corporations to identify and address all environmental and human rights risks linked to their operations.

Not only would there be a requirement to report publicly on any actions, there is also a proposal to impose sanctions.

“If you get ethics right compliance will follow.”

Earlier this month, Michael Pollitt joined PepsiCo’s Nigel Benstead to discuss the basics of fostering an ethical corporate culture on a webinar hosted by Pearl Initiative.

The discussion explored how to embed an ethical culture, and the benefits this affords, such as employee retention and inward investment.

As global cases of Covid-19 continue to rise, the strain on businesses goes unbated.

To be sure that the business is properly protected, compliance risks will need to be carefully identified and mitigated. With the business response under considerable scrutiny, getting this right will be critical.

In Governance & Compliance Magazine Leo Martin explores the steps that should be taken. Goodblog Article Webinar Article Covid-19: How can a good corporation survive? An ethical response to a global crisis: click here to read our blog “GoodCorporation are impressive people. These people are experts; these are not people who will not speak the truth … because they have done”. Lord Tony Hall, Director General, BBC

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