ESG gets Davos close-up with climate and SDGs in focus

Blog January 30, 2019

“Some people say that that the climate crisis is something that we all have created. But that is not true—because if everyone is guilty, then no one is to blame. And someone is to blame,” 16-year-old climate activist Greta Thunberg told a crowd of business leaders, dignitaries, and oligarchs at Davos as they munched on their lunch last week.

“Some people, some companies, some decision-makers in particular have known exactly what priceless values they have been sacrificing to make unimaginable amounts of money, and I think many of you here today belong to that group of people.”

Her moral indictment can be seen as a call to arms for responsible investing, and the WEF docket was full of talks related to the U.N. Sustainable Development Goals (SDGs) and impact investing. 

So what can companies, and investors, do to answer the call of a new generation?

Coinciding with Davos, the WEF released a report to answer that question: 

“Seeking Return on ESG: Advancing the Reporting Ecosystem to Unlock Impact for Business and Society.”

Some highlights from the white paper, which can be downloaded here:

  • Key problems include: “the complexity and burden of ESG reporting; incomparability of company ESG data; poor understanding of and interaction with ESG ratings agencies”
  • If left unaddressed, low transparency and confusion reduces users’ trust in ESG
    information, and lessens faith in the ability of ESG ratings to support meaningful decision-making
  • “A wide range of organizations and initiatives are looking to make an impact in ESG reporting, but many efforts are neither transparent nor well communicated.”

The quoted passage above comes from the WEF’s white paper.  It cites a Financial Times article that hits on one of the key problems of ESG investing:  ratings are a black box, and usually don’t measure the same thing.

A prior Truvalue Labs post takes on this very issue, and discussed the FT piece along with other similar stories by Bloomberg and the Wall Street Journal.

What does it come down to?  Professional investors need to know the shortcomings of ESG data where they exist–timely data is important, and so is transparent data that can be interrogated.

Truvalue Labs leverages AI and Big Data to produce a timely, transparent ESG dataset using the Sustainability Accounting Standards Board (SASB) materiality framework. We’ve also mapped the industry-vetted SASB categories to the United Nations Sustainable Development Goals (SDGs)  To learn more about how to align your activities with the SDGs and to track performance against them, see this white paper.