Investors are increasingly aware of the importance of incorporating environmental, social and governance (ESG) issues into their investment decisions. The Sustainable Development Goals (SDGs) provide a common framework to anchor ESG considerations into decision marking.
With growing evidence showing environmental, social, and governance (ESG) performance to be directly linked to company revenues and costs, ESG issues have become increasingly important for companies over recent years.
Civil society organizations, governments, and private sector investors are looking for more information on how companies are managing ESG issues facing private enterprises. These issues include e.g. the following:
Typical ESG issues in forestry and agriculture sector
The importance of ESG is often explained by two issues: Firstly, many investor groups – like pension funds, NGOs and associations – have always had also other objectives than the search for monetary profits. Secondly, an investor which invests in a company with low ESG-standards, may be exposed to various risks – like strikes and negative publicity – which reduces future profits.
Among the many ESG issues related to environmental risk, climate change is one of the most pressing, given its potential impacts around the globe. Companies generally face a range of risks and opportunities, depending upon the extent to which their supply chain is exposed to climate change risks. Other key factors include the structure and scale of companies – for example, whether they are large conglomerates or small and medium enterprises (SMEs), or consumer-facing brands and companies in contrast to business-to-business enterprises less directly exposed to retail consumers.
Indufor has extensive experience working with a range of private enterprises and investors. We are intimately familiar with several ESG frameworks (e.g. IFC and PRI), and well placed to develop and provide tailor-made solutions to address our clients’ needs.
We support private companies in the following areas:
- Measuring their performance across a suite of ESG metrics
- Make adjustments to strategy and operations where needed
- Publicly report on progress against specific ESG goals
- Conduct DD of suppliers’ compliance with ESG metrics
- Assessing ESG and value creation
In addition, we support investors on incorporating ESG on investment analysis and decision-making processes.
Examples of our projects relating to ESG assessments include:
- Forest loan due diligence for the European Investment Bank in China
- Social and environmental due diligence for a major pulp and paper company supply chain in Brazil
- Several due diligence exercises with global impact investors, for example, European climate and sustainability oriented funds
- Several stakeholder saliency assessments for major pulp and paper companies in Latin America.