The importance of ESG has traditionally not been an essential component to the financial workings of public and private issuers especially those of which are considered emerging growth companies. This is all changing at a rapid pace. Largely driven by institutional investors and followed by customers, employees and the communities in which our clients operate, environmental, social and governance issues are rapidly intensifying and constantly evolving.
Some of the world’s largest institutional investors now consider various ESG factors in their investment decisions and this has begun to trickle down to smaller funds and family offices. Because of this, FAI along with many other industry experts now view ESG as a financial risk and have put in place plans to not only mitigate risk but reap the benefits of integrating ESG into strategy and performance objectives yielding quantifiable metrics year over year.
Our plans are broken down into 4 main components
1. Assessing the current situation and identifying addressable ESG issues
2. Building a strategy to address current and potential ESG risk
3. Following and executing the strategy using specific KPI’s
4. Achieving ESG goals, communicating this to investors and continuing to tailor the internal framework around new unfolding ESG issues
Unfortunately, there is no one-size fits all answer to addressing ESG risks which is why FAI tailors each sector specific framework to our issuers’ long-term business strategy.