The Corporate Social Responsibility in the Financial Sector
Environmental Social Governance (ESG) extends the concept of Corporate Social Responsibility (CSR). ESG links a responsible corporate attitude with investment decisions, so-called “socially responsible investing” or also known as “sustainable & green finance”. The DAX® 50 ESG tracks the performance of the 50 largest German companies, which show a similarly good performance based on ESG criteria. The European Union is calling for “sustainable finance” and the Corporate Sustainability Reporting Directive (CSRD) is eagerly awaited.
The accompanying shift in society towards transparency and credibility shows a clear shift towards sustainable investment decisions in the capital market. At DFGE – Institute for Energy, Ecology and Economy – we have been helping our clients make the right decisions for over two decades.
A large number of ESG criteria are included by, for example, investors in the valuation and analysis of securities in order to be able to evaluate social, ecological and ethical aspects. These include the following, among others:
- Environmental protection & biodiversity
- Climate protection strategies / climate strategies
- Use of renewable energies
- Emissions reduction
- Conscientious use of raw materials and energy
- Occupational safety & health protection
- Compliance with labor rights
- Fair working conditions
- Prohibition of child labor / forced labor
- Compliance with ESG criteria at suppliers and service providers
- Ethical defensible corporate governance
- Prevention of corruption
- Independent Supervisory Board
- Risk Management
At DFGE, we can support you every step of the way on your journey to Environmental Social Governance (ESG) management and reporting. Our services range from opportunity-risk management, to the evaluation and assessment of sustainability criteria, to the full consideration of ESG criteria. As an authorized and long-standing partner of numerous ratings such as Global Reporting Initiative (GRI) or UN Global Compact and through our experience, we know the methods and can provide you with the best possible advice and take work off your hands. After all, the consideration of ecological, social and ethical aspects has long since ceased to be a nice-to-have, but represents a clear competitive advantage.
- Tailor-made consulting services
- Coverage of ESG criteria
- Climate strategy
- Workshops & trainings
- Subtasks / external support
ESG-Ratings are objective assessments of a company’s commitment to sustainable business practices. They can help investors incorporate more non-financial but essential information into their investment process. Depending on the industry, the aspects taken into account differ or receive a different weighting. DFGE helps you to categorise these different and, above all, constantly new requirements in a uniform manner and to answer them correctly in order to actively counter capital market risks.
MSCI ESG Research is the world’s largest provider of sustainability analysis and ratings in the ESG sector. It identifies and evaluates material ESG risks and opportunities worldwide, which are usually not taken into account in traditional financial analysis.
Trucost, as part of S&P Global, assesses risks relating to climate change, natural resource constraints, and broader environmental, social, and governance factors. Trucost has been founded in 2000 and has its head office in London. The company makes estimates about the hidden costs of unsustainable use of natural resources by companies. For the United Nations Environment Programme Finance Initiative (UNEP FI) Trucost estimated the cost of environmental damage by the 3000 largest public listed companies.
Sustainalytics is a global leader in ESG and Corporate Governance research and ratings. Over the last 25 years, they have brought together leading ESG research and client servicing professionals to retain that personal touch. Today, Sustainalytics supports hundreds of the world’s foremost investors who incorporate ESG and corporate governance insights into their investment processes.
For more than 20 years, we have been serving leading companies when it comes to calculating, evaluating and documenting sustainability.
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The concept of Corporate Social Responsibility (CSR) is being expanded to include Environmental Social Governance (ESG). This involves evaluating the social responsibility of companies or the voluntary contribution of business to sustainable development – beyond legal requirements.
While CSR refers to responsible, corporate action in the social, ecological and economic framework, ESG ideally also combines a responsible corporate attitude when it comes to investment decisions, so-called “socially responsible investing” or also known as “sustainable & green finance”. In the digital age, in which it is possible for almost anyone to take a close look at the actions and background of a business enterprise, transparency and credibility are increasingly becoming the focus of corporate decisions.
The accompanying change in society towards more conscious consumption and questioning actions also shows a clear shift towards sustainable investment decisions on the capital market.
Corporate Social Responsibility and the capital market will therefore no longer be separable in the future; sustainability and annual reports are increasingly merging. For this reason, in addition to investors and banks, other players such as rating agencies, international institutions and NGOs are entering the scene. One of the best-known examples of this is the Global Reporting Initiative (GRI), which develops and issues guidelines for the preparation of sustainability reports.
The DAX has also been addressing environmental, social and ethical aspects for some time. For example, the DAX® 50 ESG tracks the performance of the 50 largest and most liquid German companies listed on the Frankfurt Stock Exchange market that show a similarly good performance based on ESG criteria. Furthermore, the stocks must have passed standardized ESG filters related to Sustainalytics‘ Global Compact Screening. Furthermore, companies that have a stake in businesses involving controversial weapons, tobacco production, thermal coal, nuclear energy and military contracts are excluded.
But the European Union is also gearing up for future requirements with new directives and regulations on sustainability reporting and “sustainable finance.” As early as April 2021, the European Commission published its proposal for a Corporate Sustainability Reporting Directive (CSRD) to replace the Nonfinancial Reporting Directive (NFRD) currently in force. The proposal still has to go through the courts, but already offers a preview of the changes that will come to companies, banks and insurance companies in terms of reporting.