What do companies with improved financial results have in common in terms of ESG practices and frameworks?

Source: The  Center for Sustainability and Excellence (CSE), 17 December 2020

The Center for Sustainability and Excellence (CSE) announces its fourth consecutive 2020 Annual Research into ESG Ratings and Sustainability Reporting Trends in North America, focusing in common ESG practices and frameworks used by companies and organizations with improved financial results (e.g Annual Revenues increase). The analysis of the companies with the highest ESG scores shows strong evidence that ESG Reporting and Strategies with ambitious goals together with the use of appropriate frameworks have a very positive impact on financial performance.

The research analyzes 660 unique Sustainability (ESG) Reports published by companies and organizations based in North America (U.S.A. and Canada), many of them included in the Fortune 500 companies.  The research examines the ESG performance and practices of top 50 companies and top 10 in 12 different sectors in terms of consolidated ESG ratings such as CSRHub, MSCI, Sustainalytics and CDP.

During a 3- year period (2017-2019),  4 out of 5 of the top ESG rated companies achieved better financial results as indicated by their annual revenues. All these companies had comprehensive ESG strategies and transparent Sustainability Reporting that includes ambitious goals, which are the drivers for high ESG scores.

Other important findings of the research include:

  • Fifty-nine percent (59%) of the ESG reports used the guidelines of the Global Reporting Initiative.
  • 23of the ESG reports refer to the UN Sustainability Development Goals, an increase of almost 10% compared to the previous research.

Looking at the top 10 companies in 12 sectors based on their consolidated ESG Ratings 39% of the organizations have used the SASB Standards to provide information in a manner that is most relevant to their financial stakeholders, while the TCFD recommendations are gaining traction, as 38% of the top 10 companies are identifying and reporting their climate-related financial risks and opportunities.

CSE used the outcomes of the research to further strengthen and expand the Return on Sustainability (ESG) framework which was established through the results of the previous researches in 2018.