ESG considerations: how to unlock value
Faced with the impacts of climate change, inflation and energy price rises, it’s clear business operating expenditure is under pressure and stressing our vulnerability to resource scarcity. This is where Environmental, Social and Governance (ESG) advisory comes in.
More than a risk management tool, ESG is an opportunity to unlock value. It can highlight transaction opportunities and environmental risks, and can optimise asset management to set your business up for success.
In this video series, Will Emtage, Associate Director – Sustainable Business & ESG, breaks down the key considerations and how to harness ESG to drive revenue generation.
Evolving due diligence requirements
Due diligence priorities are shifting. Inflation has driven revenue generation even higher up the agenda. And more emphasis is being placed on investing in ‘value’ stocks over ‘growth’ stocks.
ESG trends
There is growing interest in the way ESG intersects with business fundamentals. This prompts us to challenge our approach to ESG and consider:
- How can ESG factors be monetised to drive measurable profits from the outset?
- How can adopting an ESG strategy drive resource efficiency and cost control?
- How can attention to ESG considerations improve information flow within firms?
ESG and value-creation
ESG is more than just a risk management tool; it’s an opportunity to unlock value. We start by mapping ESG criteria to the core revenue drivers for each of our client’s businesses.
Examining these ESG factors can often highlight unrecognised transaction opportunities, from the circular economy and shifting consumer preferences, to monetising risk reduction through insurance contracts.
Themes and pressures
The renewable energy industry is buzzing with ESG activity. Driven by concerns for energy security, sharp rises in energy prices have upped the pressure on operating expenditure for many businesses.
But at the crux of it, the impact of energy price rises highlights our vulnerability to resource scarcity - this is where ESG advisory comes in.
Clarity about environmental risks affecting your business can improve resource management and lay the groundwork for value-creation.
Implementing ESG insights
Turning ESG insights into action is a key differentiator between companies. Really successful implementation is about prioritising tasks around a business case that has consensus support and stakeholder buy-in. From the advisory standpoint, this is about ranking ESG insights on a cost-benefit basis, in a way that reflects value-at-risk.
Without that connection to business fundamentals, there is no business case – and it’s difficult to win support from key stakeholders.
Maximising value from ESG data
Implementation is also about presenting ESG data in a way that’s operationally useful.
This requires deep understanding of the bottlenecks and constraints that businesses face. ESG data can then be presented in a more tailored way that ensures relative ease of use, which will help materialise your ESG insights. Operationalising ESG data in this way increases the likelihood that you’ll see a return on investment.
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