August 31, 2021
A Good ESG Score Pays Off, Presenting a New Challenge to the Energy Sector
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ESG, or Environmental, Social, and Corporate Governance, is here to stay. Gone are the days of simply paying lip service to goals such as diversity and inclusion, sustainability, and corporate giving. Metrics are now needed to prove an organization’s commitment to ESG, and having a good ESG score pays off: “…companies with high ESG scores experienced lower costs of capital, lower equity costs, and lower debt costs compared to companies with poor ESG scores.”
While the Forbes article highlights the need to report on ESG metrics (the sustainability reporting rate for G250 companies is 96%, within the oil and gas sector, the rate is 100% for G250 companies) there are no winners yet at the individual company level. Only ESG and McKinsey pop up as positive mentions in our entity word cloud – most likely because ESG is now a financial imperative for companies, and McKinsey experts sounded that trend-bell the clearest. Meanwhile, oil and gas sector companies are reporting on sustainability but it’s unclear who is leading the pack in reductions in emissions, particularly carbon dioxide. This is represented in the strong presence of risk language featured in the article, as ESG becomes a necessity and challenge for the energy sector.
Prioritizing sustainability is no longer just trendy, it’s now backed by investment dollars.
Read our full article analysis here.
Photo by Tyler Casey on Unsplash