Nowadays, return on investment and profitability are not the only criteria looked at by donors when selecting an investment project.
With more and more pressure from the environment, society, and governments, investors are keen to add a few variables to the list that they will consider first. This is when the environmental, societal, and governance (altogether – ESG) factors become significantly important.
However, for an investor, it is not easy to navigate the myriad ESG factors. After all, these are not economic indicators such as ROI or EBITDA that can be easily analyzed. What should an investor do in when ESG seems murky or unclear? Expert Networks can help solve the mystery.
Rule of thumb: A collection of environmental, social, and governance criteria known by the acronym ESG are used by socially conscious investors when making investment decisions.
These requirements take into account how successfully enterprises protect the surroundings and the communities in which they operate, as well as how they guarantee that corporate governance and management adhere to strict guidelines.
The ESG acronym is comprised of:
- Environmental factors that focus on protecting the environment. The environmental category covers carbon emissions, waste management, etc. For instance, does the business use hazardous chemicals in its manufacturing process?
- Social factors look at the way a business respects people within as well as outside the organization. This category covers diversity, customer satisfaction, human rights, etc.
- Governance elements take into account how a company is managed and encompass internal corruption, lobbying, etc.
Expert networks’ role in ESG investment decisions
Expert networks like RightAngle Global link investors with professionals in a field who can offer valuable perspectives and guidance on a range of business-related issues. Expert networks are becoming an essential component of due diligence procedures for many investors, especially for those conducting in-depth research.
For instance, someone with expertise in renewable energy could be sufficiently qualified to shed light on how a business is trying to lower its carbon footprint.
It is important to remember that, prior to considering taking any further steps, investors should thoroughly understand the qualifications and objectivity of the specialists they consult with and they may also consider carrying out their own due diligence. But this is not the case when working with RightAngle Global where we help our clients to connect with experts and ensure the quality of the interactions by comprehensively screening each profile beforehand.
How can expert networks be leveraged to help investors review the ESG criteria of a project?
- Learn about the prospects and risks related to ESG that businesses face. For instance, an investor could consider consulting with a specialist to learn more about the risks related to a specific industry.
- Obtain feedback on the evaluation and research regarding ESG. Investors can receive useful feedback on ESG research reports and other analytical materials from professionals vetted by expert networks.
- Verify the facts and statistics from ESG. Investors can use expert networks to confirm the reliability and accuracy of ESG data.
In real life, these business connections are highly lucrative. Here are some examples of how professionals provided by expert networks guided ESG investment decisions:
- A corporate social responsibility (CSR) expert helps investors understand how a company’s CSR activities are affecting its image and brand value.
- A human capital management (HCM) expert helps to assess how the HCM policies of a business affect its personnel efficiency and retention.
- A supply chain management (SCM) expert evaluates how a business’s SCM actions affect its exposure to ESG risks such as forced labor and pollution.
Expert networks can serve as a useful resource for ESG investors who want to learn more about the intricate ESG possibilities and risks that businesses face by connecting with experienced professionals.
RightAngle Global has a large pool of experts who can provide investors with valuable insights into ESG risks and opportunities. Contact RightAngle Global and we’ll schedule calls with subject-matter experts in the shortest time possible.
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