Practical 
action for a 
world in flux
Weaving the golden 
thread between 
ESG and investors

2
Weaving the golden 
thread between 
ESG and investors
As ESG disclosure and its influence on access to 
capital becomes the new normal, a more strategic 
approach is vital in order to surface the right content, 
data and sentiment for investors and analysts.
Investors view the sustainability agenda through 
the ESG lens, but many companies are simply 
‘rebranding’ their sustainability and CR activities 
without much thought to the needs and nuance of 
ESG requirements. 
A vital new partnership is emerging between investor 
relations, sustainability/CSR and communications 
experts in order to navigate the complexities of 
ratings, benchmarks, listing requirements, reporting 
frameworks and other external communications that 
all affect investor analysis.
Here we unpack the components shaping the ESG 
agenda, identify the emerging trends, and share 
clear actions to build the golden thread between ESG 
disclosure and investor impact.
WE LOOK AT  THE MAIN 
DRIVERS OF ACTION
ESG FOUNDATIONS	
03
RATING AGENCIES	
05
LEGISLATION & LISTINGS 	
07
 FRAMEWORKS & REPORTING 	
10
 VOLUNTARY DISCLOSURE 	
12
 COMMUNICATIONS 	
13
GETTING PRACTICAL 	
14
INTRODUCTION

3
ESG FOUNDATIONS
Getting the foundations right
ESG is part of the new normal 
The past 25 years has seen a 10-fold 
increase in reporting requirements, but 
it’s the past 12 months that has seen the 
greatest acceleration and change.  
There has been a 50% increase in 
searches for ESG in the last 12 months, 
according to Google Trends.
86% of companies have ESG reports/
sections, this represents a rise from 20% 
in 2011 1. 
E-S-G. Each is unique 
Of the 5 major ratings questions 35% are 
‘G’, 46% ‘E’ and 18% are ‘S’. But, the % split 
doesn’t give the full picture.2
There is a bias towards Governance as a 
proxy for competent management of all 
issues, particularly where performance in 
‘S’ is harder to quantify and ‘E’ becomes 
increasingly regulated. 
There is increased sophistication of 
measuring and monetising the impact 
of environmental risk, and new models 
to capture social impact and value are 
enhancing investors ability to analyse 
company performance in the areas of E&S.
The conversation around ‘S’ is shifting 
Covid19 in conjunction with Black Lives 
Matter and previously #MeToo is shining 
a light on human capital and there is a 
demand for the social metrics to follow. 
LOOK OUT FOR
The widespread adoption of ESG 
disclosure (e.g. SASB) in forthcoming 
sustainability and annual reporting 
as well as standalone ESG reports 
and web sections. 
LOOK OUT FOR
Human capital strategies 
that draw together:
1  The Governance  
& Accountability  
Institute (G&A)
2  Valuing Respect:  
ESG Analysis  
(Erangey, 2018)
Sources
DIVERSITY  
AND 
INCLUSION
HUMAN  
RIGHTS
RESPONSIBLE
SOURCING
CORPORATE 
CULTURE

4
ESG FOUNDATIONS
ESG is the new meeting  
place for IR, CSR, HSE and PR  
The substance of ESG reporting is still being 
driven by CR/sustainability teams. But, it 
requires far greater collaboration to deliver 
the best outcomes for investors.
Globally, IR teams are responsible for 
32% of ESG communications, 40% being 
sustainability teams, 17% being Corporate/
Company Secretary3. 
Sentiment is being increasingly used as 
an element in ratings (e.g. State Street4) 
meaning communications and reputation 
are being measured in new ways so 
clients increasingly need to be more 
communications savvy. 
Governance 
1	
Compensation*
2	 Board structure
3	 Succession 
4	 Board involvement  
in business 
5	 Management 
composition
5	 Shareholder views/
involvement 
Environment 
1	
Carbon footprint/ 
emissions
2	 Environmental licenses
3	 Regulation
4	 General environmental 
policy 
5	 Water usage 
Social 
1	
Labour practices
2	 Community relations
3	 Government relations 
taxation/regulation
4	 Supply chain issues
5	 Human rights
Top themes of questioning from investors5
*Companies are increasingly being asked about how the performance to tackle climate 
change is connected to renumeration e.g. BP’s 2020 renumeration plan saw an increased from 
10% to 20%. The breakdown is 50% ’Financial’; 10% Operational; 20% Safety; and 20% Environment.6 
LOOK OUT FOR
ESG steering groups being 
formed to co-ordinate 
actions to maximise effective 
investor communications. 
Sources
3  IR Magazine, Global 
IR Practice: ESG 
Communications (2017)
4  State Street ESG 
Capabilities 
5  IR Magazine, Global 
IR Practice: ESG 
Communications (2017)
6  BP Directors’ remuneration 
report 2019

5
Understanding rating agencies
Rating agencies are collecting 
and analysing data in 
increasingly sophisticated  
and multi-dimensional ways 
AI technologies and data scraping is now 
central to how ESG rating agencies access 
data and generate analysis. It enables firms 
to distil ESG signals from unstructured data 
such as news media, industry publications, 
NGO reports, and other digital sources.7
For example, MSCI uses technology and 
AI to extract investment-relevant insights 
from unstructured data with 60% of files 
validated via AI based checks.8
Raters also aggregate data and assess 
based on public  filings, such as annual 
reports and sustainability or CSR reports, 
company websites and policies.
In reality it is GES, not ESG 
There is an emphasis on the ‘G’ questions 
from investors and within the rating 
agencies. Governance is often used as a 
proxy for measuring performance in the 
environmental and social areas. 
But there is a problem:
Governance has the lowest correlation 
when comparing ESG rating agencies 
scores across a common sample of 
companies.9 This means ESG rating agencies 
cannot agree what the appropriate 
questions and indicators of good practice 
are in this area making it harder to target 
actions and content effectively. 
Environment has the highest correlation, 
and therefore agreement of commonly 
asked metrics, across ESG rating agencies 
and Social is in the middle.10
7   S&P Global
8   MSCI
9   MIT Sloan School of 
Management
LOOK OUT FOR
Greater use of easily searchable 
company ESG websites using  
a limited set of key words to  
aid AI and maximise scores.
ACTION
Think of ESG communications  
as a specific workstream and plan 
content to be discoverable and 
accessible for a specific ESG audience.
Sources
10   Conflicting ESG Ratings 
article, Bloomberg
RATING AGENCIES

6
ACTION
Be sure to use investor calls to understand which 
ratings your key investors view as authoritative. 
Focus your ESG disclosure on the priority ratings 
for your investors and engage with the rating 
agencies to understand their methodologies.
Not all ratings are 
created equal...
Competition in the ESG rating market  
is heating up. There are currently  
600 ESG ratings.11
There is a lack of consistency between 
scoring methods, which can lead to 
companies being assessed very differently. 
For example, in 2018, FTSE rated Tesla last 
for global auto ESG. MSCI, meanwhile, rated 
it best. In Sustainalytics’ rankings, it fell 
around the middle of the pack.12
There is a very low correlation between 
the methodologies, weighting of scoring 
across the different rankings. 
Tesla’s rankings varied hugely across different rating agencies
6
1 1  Rate the Raters, 
Sustainability
12   FT Article: ‘Lies damned 
lies and ESG rating 
methodologies
Sources
MSCI
Sustainalytics
FTSE
LOOK OUT FOR
Consolidation in ESG ratings 
and changes in the weight 
given to ratings by investors. 
RATING AGENCIES

7
Collects ESG Data for over 9,000 
companies. Integrated into Bloomberg 
Equities and Intelligence Services 
International scope.
Measures the depth, extent, and quality  
of public corporate disclosures on ESG 
issues, and identifies key disclosure 
omissions. ISS’s ‘Quality Score’ provides  
in-depth research on corporate 
governance on over 5,600 publicly- 
traded companies globally.
MSCI ESG Research is one of the largest 
independent providers of ESG ratings.  
hey provide ESG ratings for over 6,000 
global companies and more than 400,000 
equity and fixed income securities.
Covers over 6,500 global companies 
across 42 sectors. Looks at industry-
specific ESG indicators with at least 70 
indicators in each. Also looks at systems  
to manage ESG risks and disclosure of  
ESG issues and performance.
Bloomberg
Institutional 
Shareholder  
Services (ISS)
MSCI
Sustainalytics
Out of 100. 
Bloomberg also provides 
scores from third party 
rating agencies
1st to 10th decile –
1st indicates relatively 
higher quality governance 
practices and relatively 
lower governance risk 
while the 10th decile 
indicates relatively higher 
governance risk. 
 AAA-CCC scale
Out of 100. 
Sector/industry-based 
comparison.
Bloomberg ESG data covers 120 environmental, social and governance indicators including: carbon 
emissions, climate change effect, pollution, waste disposal, renewable energy, resource depletion, 
supply chain, political contributions, discrimination, diversity, community relations, human rights, 
cumulative voting, executive compensation, shareholders’ rights, takeover defence, staggered  
boards, and independent directors.  Bloomberg ESG rating will penalise companies for “missing data.”
ISS analyses over 200 factors, divided into four pillars: board structure, compensation/
remuneration, shareholder rights, and audit and risk oversight. 
Depending on the governance standards in each region, the ISS voting policy, and the impact  
on governance practices, a specific weight will be placed on each factor.
Companies are invited to review, verify and provide feedback through the ISS Corporate 
Solutions’ Governance Analytics platform.
MSCI looks at 37 ESG issues under ten themes: climate change, natural resources, pollution and 
waste, environmental opportunities, human capital, product liability, stakeholder opposition, 
social opportunities, corporate governance, and corporate behaviour.
Data is aggregated and assessed based on 100+ specialised datasets from governments,  
NGOs, company disclosure via 10-K, sustainability reports, and proxy reports; and over 1,600+  
daily media sources. 
Over 20 major Investors chose to use MSCI ESG data, including: BlackRock, State Street,  
Allianz Group, BMO Global Asset Management, Morgan Stanley, Nomura Asset Management.
Sustainalytics covers at least 70 indicators in each industry. ESG indicators are split into  
three dimensions:
• Preparedness: Assessment of management systems and policies to manage ESG risks.
• Disclosure: Whether company reporting meets international best practice standards and  
is transparent in relation to ESG issues.
• Performance: ESG performance based on quantitative metrics and qualitative assessment  
based on review of controversial incidents the company may have been involved in.
What are the rating agencies looking for and how different can they be? 13
Framework
Description
Rating Scale
How it works?
13   ESG Reports and Ratings: What They Are, 
Why They Matter, Harvard Law School
Sources
RATING AGENCIES

8
A dynamic regulatory environment
ESG listing requirements are 
becoming mainstream
We might expect Japan, US and France to 
have ESG listing requirements but Estonia, 
UAE, Sri Lanka and Hong Kong all now have 
ESG requirements too. There are now 54 stock 
exchanges that have ESG listing requirements, of 
which 35% have appeared in the last 12 months.14
Nasdaq has created an interface measuring 
the global sustainability effect of a portfolio and 
individual securities. The ESG Footprint15 has 40 
filtering criteria, using 60 different global data 
sources and uses a combination of Nasdaq 
proprietary raw ESG and machine-learning data.
The first company to be reprimanded for 
failure to meet listing requirements will take a 
big reputational hit. Also, smart companies on 
the path to IPO will embed ESG early to avoid 
complexity and cost at the point of listing.
LOOK OUT FOR
The Sustainable Stock Exchange (SSE) Initiative a UN Partnership Programme organised by the United 
Nations Conference on Trade and Development (UNCTAD), the UN Global Compact, UN Environment 
Finance Initiative (UNEP FI) and the UN-supported Principles for Responsible Investment (PRI). 
WRITTEN GUIDANCE  
ON ESG REPORTING
45
MARKETS COVERED  
BY AN ESG INDEX
40
MANDATORY ESG 
LISTING REQUIREMENTS
24
ESG BOND SEGMENTS
19
NUMBER OF EXCHANGES
2000
2008
2004
2012
2002
2021
2006
2014
2016
2018
2020
TRAINING ON ESG TOPICS
50
Incredible growth in the interest and 
action on ESG from stock exchanges
ACTION
Most companies have only one or two listing 
requirements to follow directly but sophisticated 
companies will also consider the listing 
requirements in key markets to avoid falling foul 
of domestic expectations in foreign markets.
14   ESG Footprint Measure  
your portfolio’s ESG 
impact
15   ESG Disclosure  
Guidance Database
Sources
LEGISLATION & LISTINGS

9
ESG FOUNDATIONS
LEGISLATION & LISTINGS 
9
ESG isn’t a ‘New York thing’, it’s a global thing 
Over 80% of the world’s top economies by GDP 
in 2016 mandated ESG reporting in some form16 
USA  
The first Congressional hearing of 
ESG issues happened in July 2019, 
covering five proposed bills:
– ESG Disclosure Simplification  
Act of 2019
– Shareholder Protection Act of 2019
– Corporate Human Rights Risk 
Assessment, Prevention and 
Mitigation Act of 2019
– Climate Risk Disclosure Act of 2019
– Country by Country Tax 
Payment Disclosure
CHINA 
The China Securities Regulatory 
Commission is mandating all listed 
companies and bond issuers to 
disclose ESG risks by 2020.
EU  
The European Green Deal17 is the 
roadmap for making the EU’s 
economy sustainable. The EU 
will be climate neutral in 2050. 
A European Climate Law18 is 
turning the political commitment 
into a legal obligation and a 
trigger for investment.
The non-Financial Reporting 
Directive (NFRD) aims to establish 
a minimum standard for ESG 
reporting across the EU. 
New European Union taxonomy19 
will introduce disclosure 
requirements for “sustainable” 
index and benchmark providers 
by end of 2022. They will have to 
provide full transparency on their 
methodologies and data sourcing. 
UK  
Carbon emissions, 
human rights and 
diversity reporting is 
required by all listed 
companies in the 
Directors’ Report with 
statutory annual reports.
All listed companies 
and large asset owners 
expected to disclose 
in line with the TCFD 
recommendations  
by 2022.
LOOK OUT FOR
New laws emerging on all  
elements of ESG in various 
geographies. 
ACTION
Map the evolving legal landscape 
against your current activities  
and reporting to make sure you 
keep up-to-date on the rapidly 
evolving requirements. 
16   Data from Corporate 
Register, October 2016
17   EU Green Deal, European 
Commission
18   European Climate Law, 
European Commission  
19   EU Taxonomy 
20  IR Magazine
21   SEC public statements 
Sources

10
Understanding reporting frameworks
Start with SASB
ESG reporting has seen an explosion in  
reporting requirements. WBCSD has 
information on 2,000 ESG reporting 
requirements and resources 
from 70 countries.
This myriad of frameworks can be a 
bewildering alphabet spaghetti of 
acronyms. TCFD, UNGC, CDP, PRI, IIRC and on.
Major investor, BlackRock, set out the 
expectation that its companies should  
have an ESG report that aligned with  
SASB and TCFD.
“This year, we are asking the companies 
that we invest in on behalf of our clients 
to: (1) publish a disclosure in line with 
industry-specific SASB guidelines by year-
end, if you have not already done so, or 
disclose a similar set of data in a way that 
is relevant to your particular business; 
and (2) disclose climate-related risks in 
line with the TCFD’s recommendations, if 
you have not already done so. This should 
include your plan for operating under 
a scenario where the Paris Agreement’s 
goal of limiting global warming to less 
than two degrees is fully realized, as 
expressed by the TCFD guidelines.” 
LARRY FINK CEO LETTER, 2020
As the newest of the major frameworks 
and built for the era of ESG, SASB takes 
into account sector priorities and aligns 
with a range of other frameworks e.g. 
TCFD, GRI and CDP and references 
metrics already in use by industry, 
from more than 200 entities.1
LOOK OUT FOR
Greater uptake of SASB and 
battles over SASB’s limitations 
as most companies need to 
incorporate disclosures from 
multiple sectors to effectively 
disclose their ESG risks.
ACTION
Analyse your current reporting 
and actions against your 
relevant SASB sector guide to 
see how you currently perform 
and where you might have gaps. 
FRAMEWORKS & REPORTING

11
Don’t end with SASB
SASB’s success is its ruthless focus on investor risks in light of global social and environmental 
trends. But there are other frameworks and guidance documents that dig into specific 
technical issues or tackle ESG from a different stakeholder perspective.22 There is discussion 
between GRI and SASB about collaboration, currently the two organizations’ work together  
will focus on going into the marketplace with harmonized, complementary messages.23
‘E’: Climate Change
CDP’s disclosure requirements regarding 
emissions, water and forests and the 
Climate Disclosure Standards Board’s 
(CDSB) Framework for reporting 
environmental information and natural 
capital in mainstream financial reports.
 
‘S’: Human Rights
UN Guiding Principles Reporting Framework 
addresses reporting on human rights 
according to the UN Guiding Principles  
on Business and Human Rights.
 
‘G’: Governance
UNCTAD’s Guidance on Good Practices 
in Corporate Governance Disclosure 
establishes a benchmark for identifying 
corporate governance issues that could  
be included in corporate reporting.
ACTION
Conduct a strategic review and dig into issue specific frameworks (e.g. the UNGP 
Reporting Framework for Human Rights and CDP for water, emissions or forests) 
to understand best practice and identify how you’re performing in all areas.
22   SASB Overview
23   GreenBiz Article
Sources
FRAMEWORKS & REPORTING

12
Understanding the voluntary frameworks
Sustainability accounting standards focused on 
known trends and uncertainties that are reasonably 
likely to affect the financial condition or operating 
performance of a company and would therefore be 
considered material24 under Regulation S-K. 
Specific disclosure guidelines and requirements for 
compliant non-financial sustainability reporting on 
economic, environmental and social performance 
areas. The standards are modular and can be 
used in a selective fashion to meet the desired 
compliance level and disclosure needs of the 
reporting organization. 
Comparable and consistent disclosures used 
to demonstrate corporate climate change risk 
assessment, scenario planning and resilience. 
Unlike other environmental reporting initiatives, 
TCFD requires organizations to report on their 
response to environmental pressures, rather than 
their impact on the environment. 
Global disclosure program that enables 
participants to measure and manage their 
environmental impacts and link environmental 
integrity, fiduciary duty and public interest 
so companies, investors, and other global 
stakeholders can benchmark performance and 
make better-informed decisions on climate actions. 
Sustainability Accounting 
Standards Board (SASB) 
]Global Reporting  
Initiative (GRI) 
Task Force on  
Climate-related Financial 
Disclosures (TCFD) 
CDP
Voluntary disclosure of relevant sustainability 
metrics in company financial disclosures, 
segmented by industry. 
Voluntary disclosure through a formal digital
or printed sustainability report, including all
ESG topics deemed to be relevant to the 
organization and all related management 
approach components. 
Voluntary disclosure24 within mainstream annual 
financial filings of the identification, assessment, 
management, and oversight policies and 
practices affiliated with climate-related risks and 
opportunities in the areas of governance, strategy, 
risk management, and metrics and targets. 
Voluntary disclosure of non-financial data, 
including greenhouse gas emissions and company 
environmental performance, focused on climate 
change, forests, and water security. Performance 
is benchmarked against industry peers, scored 
and ranked publicly. Company results are publicly 
available. 
More useful information for investors and 
improved corporate performance on those 
environmental, social and governance issues 
most likely to affect value. 
A sustainable global economy that combines 
long-term profitability with ethical behaviour, 
social justice and environmental care 
Consistent, decision-useful, forward-looking 
information on the material financial impacts of 
climate-related risks and opportunities, including 
those related to the global transition to a lower-
carbon economy.
Using the power of measurement, standards and 
information, and leveraging market forces, to 
improve the management of environmental risk. 
Framework
Description
Format
Impact
VOLUNTARY DISCLOSURE
24   See SASB, Approach to Materiality and 
Standards Development
Sources

13
Excellent ESG communications 
ESG and sustainability 
communications: either/or?
No. ESG reporting is not a replacement 
for sustainability reporting or broader 
communications. There are lots of 
different stakeholders with different needs 
and the reality is you need to respond to 
them individually. Investors require specific 
data and information, but don’t forget:
You still need to have ways to excite 
colleagues and customers on issues  
they care about most 
You need information that allows NGOs 
to see their key topics from sustainable 
seafood to animal welfare
You need a compelling narrative and a 
clear strategic framework that is aligned 
with your corporate purpose and the 
longer term vision for the company 
Leading companies like 
Walmart, are focused ESG 
reports or presentations 
of ESG- relevant data 
which aren’t trying to 
compromise and be all 
things to all people.
While they weave together 
multiple frameworks, 
leaders like JetBlue, 
also overlay a clear 
understanding of what is 
material to the business. 
Companies like PepsiCo 
have ensured that their 
information is accessible 
and web-based so it can 
be easily captured.
Three elements of great ESG Reporting: 
LOOK OUT FOR
Increased ESG 
communications and 
connected disclosures 
aimed at investors.
ACTION
Benchmark your current ESG disclosure and 
communications against best practice within 
your sector. Think about content, accessibility, 
navigation and alignment with corporate purpose.
COMMUNICATIONS

Looking ahead and practical action 
The ESG space is dynamic. 
The various stakeholder requirements and expectations are 
becoming more sophisticated and investor relations teams 
internally will be on the front line of this evolution. Furthermore, 
regulations connected to action and disclosure surrounding 
ESG are rapidly evolving and it is essential to keep abreast of 
the emerging trends. 
Fundamentally, it is not just about communication and 
disclosure. The increased disclosure and transparency may 
build accountability, but good quality information about 
meaningful and impactful work is the heart and future 
of the discipline. The very first step in building strong ESG 
performance is a focus on the fundamentals of governance.
To find out more about how BRODIE can support 
you and your colleagues with ESG excellence, 
please contact Georgie Erangey: 
georgie@brodiepartners.com
14
GETTING PRACTICAL

15
Looking ahead and practical action
01 ACTION
Map the evolving legal 
landscape against your 
current activities and 
reporting to make sure you 
keep up-to-date on the 
rapidly evolving requirements.
02 ACTION
Analyse your current 
reporting and actions 
against your relevant SASB 
sector guide to see how you 
currently perform and where 
you might have gaps
06 ACTION
Be sure to use investor 
calls to understand which 
ratings your key investors 
view as authoritative.
08 ACTION
Conduct a strategic review 
and dig into issue specific 
frameworks (e.g. the UNGP 
Reporting Framework for 
Human Rights and CDP for 
water, emissions or forests) 
to understand best practice 
and identify how you’re 
performing in all areas.
04 ACTION
Focus your ESG disclosure 
on the priority ratings 
for your investors and 
engage with the rating 
agencies to understand 
their methodologies.
03 ACTION
05 ACTION
07 ACTION
Most companies have only  
one or two listing requirements 
to follow directly but 
sophisticated companies 
will also consider the listing 
requirements in key markets to 
avoid `falling foul of domestic 
expectations in foreign markets.
Think of ESG communications 
as a specific workstream 
and plan content to be 
discoverable and accessible 
for a specific ESG audience.
Benchmark your current 
ESG disclosure and 
communications against 
best practice within your 
sector. Think about content, 
accessibility, navigation 
and alignment with 
corporate purpose.
GETTING PRACTICAL

16
ESG FOUNDATIONS
Practical 
action for a 
world in flux
BRODIE 
The Harley Building 
77 New Cavendish Street
London W1W 6XB
www.brodiepartners.com
We are an international responsible business  
and sustainability advisory firm
We work with some of the largest, most advanced 
companies in the world across many sectors. We 
are helping them to succeed in the transformation 
of their business in the age of sustainability.
We drive three significant changes:
Change 
corporate 
impact
Change 
consumption
Change  
for people
To find out more about how BRODIE can 
support you and your colleagues in ESG 
excellence, please contact Georgie Erangey: 
georgie@brodiepartners.com