The document discusses Environmental, Social, and Governance (ESG) criteria. Over the past five years, the financial industry has adopted ESG as the standard terminology to evaluate extra-financial data that investors increasingly consider during comprehensive investment reviews. ESG criteria codify what companies disclose across environmental, social, and governance issues. Socially Responsible Investing (SRI) refers to how investors analyze companies based on their ESG disclosures and Corporate Social Responsibility (CSR) practices.

1. ESG
 Environmental
 Social and
 Governance
Peter Schellinck www.schellter.eu

2. Environmental, Social and Governance (ESG)
Criteria
Over the past five years, the financial
industry has adopted the acronym ESG
(Environmental, Social and Governance) as
the standard terminology for the group of
extra-financial data that investors increasing
evaluate as part of their comprehensive
investment review.
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3. CSR / ESG / SRI
 Corporate Social Responsibility (CSR)
Explains how the company behaves
 Environmental, Social and Governance (ESG)
criteria
Codify what the company discloses /
reports
 Socially Responsible Investing (SRI)
How investors analyze companies
according to their CSR practices and ESG
disclosures
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4. How should this information be organized?
1. Financial
 Annual Report
 Audit
 Bond Issues
 Cash Flow
 Crop Insurance
 Dividend
 Fair Trade
 Financial Statement
 Market Share
 Share Price
 Transportation
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5. How should this information be organized?
2. Environmental
 Climate change
 Deforestation
 Environmental
 Report
 Fruit vs. Juice
 Location of raw materials
 Groves
 Organic Certification
 Pesticides
 Sustainability
 Water Use
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6. How should this information be organized?
3. Social 4. Governance
 Health & Safety  Annual General
 Human Rights  Meeting
 Labor Standards  Board Members
 Management
 Management
 Discussion and
 Analysis
 Supply Chain
 Management
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7. How should this information be organized?
Extra - Financial
Financial
Environmental Social Governance
Annual Report Climate change
Audit Deforestation Annual General
Bond Issues Environmental Meeting
Cash Flow Report Board Members
Crop Insurance Fruit vs. Juice Health & Safety Management
Dividend Location Raw Materials Human Rights Management
Fair Trade Groves Labor Standards Discussion and
Financial Statement Organic Certification Analysis
Market Share Pesticides Supply Chain
Share Price Sustainability Management
Transportation Water Use
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8. Structure of Underlying Model
KPIs
Non-Financials
3 Areas of E S G
Environmental Social Governance
Performance
Emissions, Human Rights Compliance
Effluentes
Resources Societal Sustainability of
11 Categories of Performance Success Factors
Measurement Waste Training &
Qualification
Environmental Product &
Compatibility Health/Safety
Employee
Management
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9. The need: objective, transparent and comparable data
 Standardised units across companies
- Consistent approach to the data
 Timely, on-going updates
- Relevant, current information must be reported
 Information broken into smaller units to measure
performance
- Policies and outcomes
 Common starting point for customised uses of the
data
 Have access to all sides of the data
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10. Relevancy of data
 Relevance differs greatly across sectors
 ESG reports are for various stakeholders
 Marketing for customers, employees, general public
 Responding to problems and pressure
 A reflection of leadership and management quality
 Necessity to cut through noise and stories
 Policies must be broken down, and the extent of
implementation
must be measured
 Objective variables must be carefully considered
 Contradicting controversies must be incorporated
 Biases of the data must be considered: market cap
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11. Trends in ESG risk assessments
 Research providers and rating agencies
 Sector reviews
 Corporate compliance assessments
 Risk monitoring getting started
 Brokerage research
 Picking themes to uncover value & risk for long-term
performance
 Convergence between ESG analysis and financial
analysis
 Getting underway where ESG factors have an impact on
valuation
 Progress in information and tools available
 ESG – proxy for quality management
 Avoid systematic risk
 Identify opportunity
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12. Investment priorities matrix” ®
Businesses with a For-profit
Businesses
single bottom line social enterprises Nonprofit
with a single
that practice social enterprises
bottom line (pure plays
corporate social (chameleons)
(financial) and migrators)
responsibility
Traditional
investors FIRST SECOND THIRD NOT A
seeking PRIORITY PRIORITY PRIORITY PRIORITY
financial returns
Socially
responsible
investors NOT A FIRST SECOND THIRD
seeking both social PRIORITY PRIORITY PRIORITY PRIORITY
and financial
returns
Social investors
seeking both NOT A THIRD FIRST SECOND
social and financial PRIORITY PRIORITY PRIORITY PRIORITY
returns
Social investors
primarily NOT A THIRD SECOND FIRST
seeking social PRIORITY PRIORITY PRIORITY PRIORITY
impact
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