ESG

ESG

Growth of ESG reflects fundamental issues we all face

The greater focus on ESG today represents a widespread response to challenges people across the world are facing. Humanity is attempting to slow down the alarming rate of climate change and the destruction of natural environments. Across the developed and developing world, there is a new sense of urgency around upholding human rights.

Expanding awareness of business ethics, global diversity and income inequality, meanwhile, has put corporate structures and decision makers under new levels of scrutiny. The devastating social and economic fallout from the pandemic has only served to put these factors into sharper relief and accelerate the rate of change.

Investors are a key driver of change

Investors, both institutional and retail, are likewise playing a prominent role in putting ESG at the top of corporate agendas. Across the developed world an intergenerational wealth transfer is happening on an unprecedented scale. In the UK, for example, £5.5tn is estimated to be passed down over the next 30 years. The main beneficiaries – Millennials and Generation Z – are making ESG central to their investment approach, and they want to invest in companies that reflect their values and that positively impact the planet and society.

The future is about sustainable growth

Companies now recognise that environmental, social and governance (ESG) concerns are no longer simply a way to signal a company’s caring credentials – they are a fundamental part of sustainable business success. As we look to recover from the pandemic and restore economic growth, ESG should be a hallmark of our approach – ensuring that the growth that is delivered is more responsible, sustainable and for the benefit of all.

Our ESG report, ESG Focus, which can be downloaded below by registering for our research portal, we put the UK smaller companies market under the ESG microscope, giving useful insight into how institutional investors are thinking about these issues as well as providing a simple, practical approach to assessing companies with our finnCap Scorecard.

finnCap ESG scorecard: what factors does it consider?

Understanding the ‘ESG’ picture on a company is undoubtedly a complex exercise. For instance: Sustainalytics collects over 200 data points on a business to compute its score; to become B-Corp certified there are c300 searching questions that must be answered about environmental footprint, social policies etc.

We have created a simple ESG scorecard for companies based around key datapoints, in each of E, S and G. As far as possible, these data points are quantitative, unambiguous, uncontroversial, easily obtained and – hopefully – meaningful.

Register for our Research Portal to download the ESG handbook and scorecard 

Findings from our ESG report

Following the launch of our ESG report, we had a tremendous response from our corporate clients. They were keen to engage to understand how they ranked versus their peers on ESG factors and what steps they could take to perform better. 

 

Our recommendations

  1. Obtain the key environmental datapoints (energy, CO2, water and waste);
  2. Prepare and apply the most important policies (environmental, discrimination, ethics and community outreach); and
  3. Continue to try to achieve greater diversity in the boardroom.

Ambition Nation | Delivering ambition for a sustainable future

finnCap launched our campaign Ambition Nation in 2017 with a clear mandate: to track the ambitions & perceptions of British small & mid-sized businesses, to help them scale by demystifying the investment landscape. The COVID-19 crisis of 2020 continues to present fresh challenges for SMEs looking to grow in a modern Britain. The funding landscape is changing, as the spotlight on more responsible growth, more human company culture, an accelerated sense of innovation and a view of a more sustainable future, takes centre stage. Today, the tenets of Ambition Nation remain the same as they ever were. We are working towards delivering ambition for a sustainable future.