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Brite Green's MD talks sustainable investment with Share Radio

Darren Chadwick speaks with Billy Bambrough on Share Radio about why companies with better sustainability management are outperforming their peers.

Nykredit published a report this week that showed that companies that have a better sustainability profile outperform those that don't. Brite Green managing director Darren Chadwick spoke with Billy Bambrough at Share Radio as to why that might be.

Click here to hear the full interview, first broadcast on 20th July 2015.

Environmental, Social and Governance (ESG) issues have historically been considered to be risk issues only, but businesses are increasingly going beyond compliance to unlock the significant opportunities that are available.

Compliance and ESG risk management are of course important and having good ESG practices helps manage the full range of material risks for a business. It is important that in addition to tradition ESG risks like pollution control or stakeholder engagement, companies need to consider how they are managing their increasing exposure to risks from issues like climate change or resource scarcity.

Taking a strategic approach to sustainability can mean finding new ways to improve efficiency and limit risks, but beyond these efficiency opportunities integrating sustainability considerations into core strategy can unlock significant opportunities. 

The realities of resource constraints and ever growing environmental and social regulation are key business issues. Companies that address these in their own operations or provide goods or services that help their customers tackle their material sustainability issues are well placed to thrive.

There are innovative business models such as those employed by Interface Flor for example, where using "cradle-to-cradle" thinking has allowed them to re-use old carpet as a raw material, drastically reducing material and waste costs whilst engaging and motivating their staff. There are also new products and services which seek to address the environmental and social challenges we now face, whether that is renewable energy and energy storage or providing goods and services to the world's poorest people.

This is something that investors and financial analysts are increasingly aware of and the importance of good quality of ESG and sustainability reporting is growing. In fact sustainability or ESG management is widely considered as a good barometer of the quality of management overall in a business. A key consideration is how sustainability issues are being incorporated into core strategy, and the Nykredit report shows that those businesses that are doing this best are also reaping the rewards in financial performance.

Institutional investors have made ESG analysis a mainstream part of their investment assessment, supported in part by the progress made by the UN PRI whose signatories have more than $58 trillion under management. Organisations like EIRIS and CDP are providing investors with more detailed information on ESG management quality and performance, and having good quality ESG reporting is now considered the benchmark for companies, not the exception.  

There are three key things that business should be doing to ensure they are managing sustainability and ESG issues well:

  1. Determine which sustainability issues are material and how they impact business performance
  2. Develop a robust and comprehensive sustainability strategy, which embeds the management of the material sustainability issues into core operations
  3. Report sustainability performance to external stakeholders and demonstrate the benefits to financial performance

Click here to hear the full interview, first broadcast on 20th July 2015.