How to boost your ESG rating with awards 

“Companies that use optimistic language, including mentions of ‘awards’ and ‘accomplishments’ typically receive the highest ESG ratings.” Deutsche Bank Research.

People often measure the value of business awards in terms of impact on sales, but the biggest return on investment can, in fact, be investment itself.

In this article, we’ll explore how ESG awards and rankings have become an increasingly important tool in proving and improving a company’s business-critical ESG rating.

“With ESG investment now worth an estimated $20 trillion and 85% of investors considering it important, it’s clear ESG is no longer just a badge of honour or buzzword – it’s business-critical, and it’s here to stay.”

ESG and the COVID-19 pandemic

While it’s still early days for predicting all of the wider socio-economic impacts of COVID-19, a recent study suggests that the nature of the pandemic means we’re, more than ever, ‘all in this together’, with workers’ health and safety at the fore. As the report suggests, “ESG investors and other stakeholders won’t allow the current economic downturn to be an excuse for abandoning their objectives”.

How is ESG measured?

Whereas fund managers used to be concerned with a company’s financial performance, ESG now means the non-financial aspects of a company are becoming just as, if not more, important than its financial results. It stands to reason: no investor could have predicted the Volkswagen emissions scandal (and subsequent share slump) just by analysing its financials.

Instead, companies are now scrutinised and rated on a raft of ESG themes. These ratings are typically based on the UN’s 17 Sustainable Development Goals, and usually cover areas such as workplace practices (diversity, wellbeing, etc.), environment, supply chain and governance. The PRI (Principles for Responsible Investment) has also published a best practice guide to help companies and fund managers understand how to define and incorporate ESG. 

So, who and what determines a company’s ESG rating? The challenge for fund managers is how to define a ‘good’ or ‘bad’ company. The reality is, it’s not an exact science ─ and there’s no one way or accepted methodology.

With no industry-wide consensus, ESG ratings are assessed using a wide variety of different methodologies and qualitative and quantitative data. According to Bloomberg, this includes scouring publicly available data, such as company statements and news stories. And of course, let’s not forget all-important ‘Sustainability Reports’ which have fast become one of the most important pieces of corporate communications for most large companies, giving them a crucial opportunity to shout about just how responsible they are.

A recent study reveals that “companies that reference awards or accreditations in their sustainability reports typically have higher ESG ratings.”​ Source: Deutsche Bank Research.

Continuous improvement and benchmarking

The additional benefit of these independent rankings and award schemes is that the robust judging and scoring systems enable companies to assess and benchmark their ESG activities against the best in the world. (Many schemes provide comprehensive feedback and, in some cases, a full benchmarking report with areas for improvement and recommended actions.)

In the race to gain the top ESG ratings, entering these schemes can help companies not only recognise and validate their ESG activity and strategy, but assess and improve on them too. That has to be good news – not just for the business but for its people and wider society.

Where to start with ESG awards

There are over 5,000 different awards and rankings on the Awards List websites (by far the largest and most popular awards websites in the world), so companies certainly aren’t short of choice. But let’s look at some of the most popular schemes under each theme:

Environment

Environmental factors could include, for example, climate change, resource depletion, waste, pollution. Here are just a handful of possible schemes: 

• The International Green Apple Awards for Environmental Best Practice.
• The Sustainability Awards.
• The King’s Awards for Enterprise: Sustainable Development (UK only) 
• The edie Sustainability Leaders Awards
• SEAL Business Sustainability Awards 

Social

‘Social’ could include, for example, human rights, modern slavery, and workplace practices/employee relations (such as diversity, health & wellbeing, training & development, etc.) There are almost limitless options under this theme, but some of the most significant include: 

• The Investors in People Awards.
• Company Culture Awards (UK only)
• Great Place to Work.
• Global Healthy Workplace Awards.
• REBA Employee Wellbeing Awards. (UK only)
• Stonewall Global Workplace Equality Index.
• The Times Top 50 Employers for Gender Equality (UK only)
• BITC Responsible Business Awards. (UK only)

Governance

Good governance is a very extensive theme and could include quality of leadership, data and IT security and systems, accounting quality, and more.

Here are just a few ideas of schemes that might be suitable: 

• IT World Awards
• Big Data – Tech Ascension Awards
• International Business Excellence Awards
• The Supply Chain Excellence Awards

As well as specific schemes covering these areas, companies could consider more general ‘responsible business’ awards that demonstrate the company is well run and that its broader ESG strategy is effective. These could include, for example:

• Ethical Corporation Global Responsible Business Awards.
• The International CSR Excellence Awards.
• The Global Good Awards.
• World’s Most Ethical Companies

ESG award schemes

There are plenty of award schemes that are specifically focused on ESG, many looking at the whole ESG approach or often specifically looking at ESG investments. Alternatively, another approach is to target broader award schemes that have specific ESG categories within them.
Examples of both of these options include:

How to boost your ESG rating with awards 

“Companies that use optimistic language, including mentions of ‘awards’ and ‘accomplishments’ typically receive the highest ESG ratings.” Deutsche Bank Research.

People often measure the value of business awards in terms of impact on sales, but the biggest return on investment can, in fact, be investment itself.

In this article, we’ll explore how ESG awards and rankings have become an increasingly important tool in proving and improving a company’s business-critical ESG rating.

The rise of ESG

Google the term ‘ESG’ and the sheer volume of articles will tell you just how influential it has become (over 42 million results at the last count).

We’ve all heard of CSR, but ESG (Environment, Social and Governance) ─ or Responsible Investment as it’s also known ─ is now a dominant term. And it has the power to make or break a business. Unlike CSR, which is self-regulated, ESG is about measuring just how responsible a business is. All-important investment managers use various scoring systems and data to assess just how responsibly a company is run (e.g. how it reduces its environmental impact, how it treats its employees and quality of management).

A poor ESG rating could lead to a company’s stocks being deemed ‘non-ESG’ and excluded. If a company wants to attract investment, its ESG rating is not just important, it’s critical. (according to the Financial Times, ESG controversies wiped $500bn off the value of US companies in 2018.) 

While the climate emergency has put impetus behind the ESG movement, there is, of course, another very logical reason for its popularity; if a company behaves well ─ looks after its people, champions equality, is environmentally friendly and well-managed ─ it’s more likely to be a safe investment and perform better in the long term. (The theory certainly appears to stack up ─ companies with higher ESG ratings perform better than those with lower ratings.)

“With ESG investment now worth an estimated $20 trillion and 85% of investors considering it important, it’s clear ESG is no longer just a badge of honour or buzzword – it’s business-critical, and it’s here to stay.”

ESG and the COVID-19 pandemic

While it’s still early days for predicting all of the wider socio-economic impacts of COVID-19, a recent study suggests that the nature of the pandemic means we’re, more than ever, ‘all in this together’, with workers’ health and safety at the fore. As the report suggests, “ESG investors and other stakeholders won’t allow the current economic downturn to be an excuse for abandoning their objectives”.

How is ESG measured?

Whereas fund managers used to be concerned with a company’s financial performance, ESG now means the non-financial aspects of a company are becoming just as, if not more, important than its financial results. It stands to reason: no investor could have predicted the Volkswagen emissions scandal (and subsequent share slump) just by analysing its financials.

Instead, companies are now scrutinised and rated on a raft of ESG themes. These ratings are typically based on the UN’s 17 Sustainable Development Goals, and usually cover areas such as workplace practices (diversity, wellbeing, etc.), environment, supply chain and governance. The PRI (Principles for Responsible Investment) has also published a best practice guide to help companies and fund managers understand how to define and incorporate ESG. 

So, who and what determines a company’s ESG rating? The challenge for fund managers is how to define a ‘good’ or ‘bad’ company. The reality is, it’s not an exact science ─ and there’s no one way or accepted methodology.

With no industry-wide consensus, ESG ratings are assessed using a wide variety of different methodologies and qualitative and quantitative data. According to Bloomberg, this includes scouring publicly available data, such as company statements and news stories. And of course, let’s not forget all-important ‘Sustainability Reports’ which have fast become one of the most important pieces of corporate communications for most large companies, giving them a crucial opportunity to shout about just how responsible they are.

A growing need for independent accreditation and validation

While sustainability reports and company statements are one way for companies to highlight their ESG activities and credentials, without hard evidence or independent validation, they can lack the necessary credibility and robustness – what’s known in the industry as ‘greenwashing’. So how does a company ‘prove’ it’s acting responsibly? And how can investors verify it?

A powerful tool in a company’s ESG arsenal is to earn external, independent validation of its responsible practices across all of the key ESG themes. If a company wins an independent award or accreditation that proves it’s not just doing what it should but is ‘best in class’, it’s ESG ratings could potentially improve. Saying ‘we’re committed to being an inclusive employer’ is one thing; saying ‘we’ve been independently ranked as one of the top 10 most inclusive companies in the world’, is far more powerful.

That’s not to mention the amount of publicity that normally swirls around the announcement of these rankings, further raising the ESG profile of the featured companies (when Hilton topped the Fortune’s Best Companies to Work For list, it appeared in over 1,000 online news articles).

A recent study reveals that “companies that reference awards or accreditations in their sustainability reports typically have higher ESG ratings.”​ Source: Deutsche Bank Research.

Continuous improvement and benchmarking

The additional benefit of these independent rankings and award schemes is that the robust judging and scoring systems enable companies to assess and benchmark their ESG activities against the best in the world. (Many schemes provide comprehensive feedback and, in some cases, a full benchmarking report with areas for improvement and recommended actions.)

In the race to gain the top ESG ratings, entering these schemes can help companies not only recognise and validate their ESG activity and strategy, but assess and improve on them too. That has to be good news, not just for the business but for its people and wider society.

Where to start with ESG awards

There are over 5,000 different awards and rankings on the Awards List websites (by far the largest and most popular awards websites in the world), so companies certainly aren’t short of choice. But let’s look at some of the most popular schemes under each theme:

Environment

Environmental factors could include, for example, climate change, resource depletion, waste, pollution. Here are just a handful of possible schemes: 

• The International Green Apple Awards for Environmental Best Practice.
• The Sustainability Awards.
• The King’s Awards for Enterprise: Sustainable Development (UK only) 
• The edie Sustainability Leaders Awards
• SEAL Business Sustainability Awards 

Social

‘Social’ could include, for example, human rights, modern slavery, and workplace practices/employee relations (such as diversity, health & wellbeing, training & development, etc.) There are almost limitless options under this theme, but some of the most significant include: 

• The Investors in People Awards.
• Company Culture Awards (UK only)
• Great Place to Work.
• Global Healthy Workplace Awards.
• REBA Employee Wellbeing Awards. (UK only)
• Stonewall Global Workplace Equality Index.
• The Times Top 50 Employers for Gender Equality (UK only)
• BITC Responsible Business Awards. (UK only)

Governance

Good governance is a very extensive theme and could include quality of leadership, data and IT security and systems, accounting quality, and more.

Here are just a few ideas of schemes that might be suitable: 

• IT World Awards
• Big Data – Tech Ascension Awards
• International Business Excellence Awards
• The Supply Chain Excellence Awards

As well as specific schemes covering these areas, companies could consider more general ‘responsible business’ awards that demonstrate the company is well run and that its broader ESG strategy is effective. These could include, for example:

• Ethical Corporation Global Responsible Business Awards.
• The International CSR Excellence Awards.
• The Global Good Awards.
• World’s Most Ethical Companies

ESG award schemes

There are plenty of award schemes that are specifically focussed on ESG, many looking at the whole ESG approach or often specifically looking at ESG investments. Alternatively, another approach is to target broader award schemes that have specific ESG categories within them.
Examples of both of these options include: