Transparency in ESG and the Circular Economy: Capturing Opportunities Through Data

With the increasing demand from investors for ESG conscious investment opportunities, and the potential for significant returns, the need for portfolio construction tools and metrics to analyze and compare investment options took off. Founded in 2009, the Global Impact Investment Network (GIIN),30 for instance, represents a commitment to utilize ES

One example of organizational structure that specifically focuses on for profit companies’ commitment to sustainability through a standalone certification is the B Corporation. This class of businesses, across sectors and industries, has committed to the integration of profit and purpose within their strategy. The B Corp certification legally requi

The data feeds into Arabesque’s asset management firm, which uses artificial intelligence to enhance a rules-based approach to stock selection that integrates ESG metrics with financial and momentum analyses, in order to produce risk-adjusted returns.

These classification systems offer unique industry-specific financial metrics, which are mapped to the Sustainable Industry Classification System (SICS)26 system. Current industry categories consist of consumer goods, extracts and minerals processing, financials, food and beverage, health care, infrastructure, renewable resources and alternative en

Over the long term, High Sustainability companies were found to significantly outperform Low Sustainability companies, both with respect to stock market performance and accounting measures (e.g., return-on-equity and return-on-assets). It may be concluded that the implementation of sustainability practices, and the ability to institutionalize them

ESG criteria set standards for a company’s operations based on how environmentally or socially conscious their operations are. Environmental criteria measure a company’s level of responsibility with respect to the nature and protection of natural ecosystems. Social criteria measure a company’s responsibility with respect to business ecosystems, inc

More recently, in an important move toward consolidation in ESG standards, in 2020, SASB has announced a merger with IIRC to take place by mid-2021.29 The merger is meant to simplify ESG disclosures.

Porter and Kramer discuss several examples of corporations that can analyze their social responsibility opportunities with the same frameworks that guide their core business decisions, and in doing so, have discovered unique market opportunities to capitalize on (e.g., Whole Foods, Toyota, Volvo). These are companies that have integrated ESG concer

Circular Economy This refers to an industrial model that redefines the use of resources in a traditionally take-make-waste industrial model, in order to design waste and pollution out of the system.