ESG can be an efficient value creator rather than a costly, low-value compliance exercise.
Investors can maximize value creation by focusing all ESG resources on the most value-creating ESG activities: performance measurement and improvement.
Disciplined focus on performance measurement and improvement is the fastest, easiest, most cost-effective route to ESG value creation – both investment value (risk/return) and societal (including environmental) value. Performance-focused ESG creates far more value and is far easier to understand, navigate, execute, and manage than standard everything-but-the-kitchen-sink, boil-the-ocean ESG.
Under the current ESG regime, organizations invest a lot in ESG and rarely receive commensurate value from it because most ESG resources go to low-value activities and high-value ESG activities are underresourced. Both companies and investors bear these costs and miss these value-creation opportunities.
Fiduciary ESG helps investors sort worthwhile from wasteful to maximize investment and social value creation and fiduciary integrity.
Do you focus on ESG measurement and performance?
Do you focus on ESG policies, practices, and commitments, or ESG frameworks that focus on policies, practices, and commitments?
ESG performance measurement creates far more value than other ESG activities. The more we focus on ESG performance measurement, and the less we focus on ESG policies, practices, and commitments (and frameworks that focus on policies, practices, and commitments), the more value ESG can create per dollar invested in ESG.
How closely have you looked at the full contents of the ESG frameworks you promote? Prestigious ESG frameworks focus on low-value activities.
Do you thoroughly understand what the frameworks you endorse lead participants to focus on?
Investors rarely have strong visibility into how prestigious ESG initiatives play out behind the scenes within companies.
Sara Schoen is a career-long (17-year) ESG practitioner with NGO, government, public REIT, and private equity expertise. She has a laser eye for sorting worthwhile from wasteful and is passionate about maximizing ESG value creation and fiduciary integrity. Sara can be reached at sara@fiduciaryesg.com.