Esg Investment Report Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Esg Investment Report Case Solution

ESG Regulations

With changing climate and demographics, the corporations have been focused on incorporating the ESG regulations into their business, as these criteria are given more weightage by the investors in choosing their investments. Sustainable investing requires the incorporation of environmental, social and good governance regulations. The current regulations which require the companies to be socially responsible implies the incorporation of the CSR (Corporate Social Responsibility) into the business operations.

Corporate Social Responsibility is assumed to be a voluntary initiative but different countries have made it a mandatory initiative through the implementation of laws to undertake CSR (Lin, 2020). In recent years, different countries have required the following actions to promote the social concerns

Mandatory CSR Due Diligence – which requires the environmental and social risks caused by the businesses and implementing reasonable plans for prevention of such risks. E.g. “France’s Duty of Vigilance Law”.
Mandatory Corporate Philanthropy–which requires a specific percentage of companies’ profits to be designated toward the corporate philanthropy and CSR activities.
Mandatory Governance Structures–which requires the fulfillment of maximizing the shareholders’ interest and the creation of a CSR board committee, which is held responsible for the implementation and supervision of the CSR policies.
Mandatory CSR Duty Under Corporate Law–which mandates for the corporations to perform their legal duties in a responsible way. E.g. UK 2006 Companies Act

Moreover, there also exist legal regulations for the environmental actions of the companies. These actions are enforced by the state environmental agencies and the Environmental Protection Agency. Before starting any environmental action or discharging a pollutant, the companies are required to take permits, which may be required under the following federal laws (Pinkerton, 2015)

Clean Air Act (CAA)
Clean Water Act (CWA)
Endangered Species Act (ESA)
Resource Conservation and Recovery Act (RCRA)

Similarly, the corporate governance rules have been implemented by different nations, which refers to different systems, rules, practices and processes required for directing and controlling a firm. The different corporate governance acts are outlined below:

UK Bribery Act(Naps., 2019)
OECD Guidelines for Multinational Corporations
Action Plan on Labor (Thailand)
Global Anti-Corruption Consortium (The United States)

ESG Ratings & Evaluations

Most of the international or the domestic (including both the private and the public) organizations are evaluated by different third parties, and afterwards, an ESG rating is being assigned to the corporations, based on their environmental, social and governance actions. The institutional investors, financial institutions, asset managers, and other stakeholders rely on the ESG ratings issued by different third party reports. The ESG ratings are provided by different sources including

Bloomberg ESG Data Service
Corporate Knights Global 100
Dow Jones Sustainability Index
ISS Quality Score
MSCI ESG Research
RepRisk Ratings
Sustainalytics Company ESG Reports
S&P Global Ratings ESG Evaluation etc.(Betty Moy Huber and Michael Comstock, 2021).

These ESG ratings provided different parties involve different methods used. For instance, Bloomberg assigns ESG rating based on a rating scale out of 100, by collecting the companies’ annual information based on the ESG activities reported by the companies through the sustainability reports or the corporate social responsibility report, websites and through direct contact with the company. On the other hand, ISS ESG rating is assigned by analyzing 200 factors, which are divided into four pillars including shareholders rights, board structure, audit & risk oversight and remuneration or compensation. The highly rates ESG companies include the top 50 companies (IBTD Staff, 2020)including Adobe, BestBuy, Proctor & Gamble, NVidia, West Pharmaceutical Services etc.........................

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Esg Investment Report Harvard Case Solution & Analysis