ESG is getting real for Natural Resource and Ag/Food participants

We are going to see more and more ESG risk come to rest on natural resource producers, utilities and food companies in the next 5 years. As this article from Bain reports, one of the leaders is Danske Olie og Naturgas.  The Danish energy company transformed and rebranded as Orsted after a thorough materiality and stakeholder analysis guided its strategy and purpose.  It was able to see ESG not as a risk and compliance exercise but as an opportunity.

 ESG is in great transition and will change fundamentally over the next several years. Even ESG incumbent ratings platforms and reporting providers are subject to “change or  die” as we move from headlines to demanding real measures that reflect actual performance and impact. The data integrity race is on for participants in the ESG industry if they want to do more than sell indexes and push agendas from whatever camp they come from.

That said, laggards such as Pemex will come under greater ESG scrutiny.  I expect there to be even more development in the futures markets where ESG data not just in S&P indexes but in traditional commodities will begin to influence futures prices.  This will all take time as perhaps the biggest barriers that remain are such things as lack of consistent ratings, lack of data integrity and the onerous and manual nature of the current creation of ESG data.  Here’s hoping for an open-source solution one day that can drive an eco-system of industry specific fundamental, quantitative and alternative data and ratings.