For over a century, the health of a company has been synonymous with its financial health, as represented in its income statement and balance sheet. In this talk, Erik Thomsen will show you why environmental, social, and governance (ESG) factors are growing in importance to investors as a means to assess corporate health, and he will outline how a program of wellbeing analytics can provide more financially relevant ESG risk assessment and better guidance for capital budgeting while leveraging existing investments in corporate analytics.
ESG reports and third-party ratings have become ubiquitous for assessing a company’s impact on the environment and society (what economists call externalities) and the way it governs itself. Underpinning investor interest in ESG ratings is the general perception that a company with poor ESG ratings today is at greater risk of financial problems tomorrow when compared to a company with similar financials but markedly better ESG ratings.
Although the specific correlations between ESG and financial performance are unclear, the high costs of producing ESG reports are clear. Plus, these reports, once produced, are not used to drive decisions. One reason for this is that most corporate ESG reporting activities lie outside of the corporation’s existing analytics programs.
Thomsen will show that, by tracking corporate impacts on non-market stakeholders and elevating the processes around ESG to the level of corporate IT and data stewardship, wellbeing analytics can provide a systematic framework for companies to improve the quality and decision value of their ESG data, reduce corporate risk, and improve the profitability of their business model while rationalizing the data/analytics processes they are already performing.
During this presentation, you will learn:
- Why ESG factors impact risk, profitability, valuation, and other measures of corporate performance
- The problems with ESG reporting as it occurs today
- How a program of wellbeing analytics provides a systematic framework for assessing ESG risk and coordinating ESG-related activities and reporting
- The kinds of data that need to be collected and analyzed for wellbeing analytics
- The kinds of analysis that are required for wellbeing analytics, and how wellbeing analytics fits as a natural extension to existing corporate analytics
- How wellbeing analytics can rationalize corporate processes and improve corporate performance while improving its net impact on the environment and human society