Leaders need hard data to make the hard decisions about sustainability

(Unsplash, 2019)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Debra Walton, Chief Customer Proposition Officer, Refinitiv

Balancing short-term performance pressures with the need to invest in a long-term future is one of the most important tasks a modern leader faces. Those that achieve it will contribute to a sustainable ecosystem in which the company and its stakeholders will thrive.

Although the majority, if not all leaders see performance as a strategic priority, not all see sustainability with an equally clear lens. That level of clarity comes from a willingness to make hard decisions.

These hard decisions extend beyond corporate leaders to include individuals and governments on a local, state and federal level around the world. They unite us as a global society and provide a shared opportunity for driving awareness and critical thinking, adoption, and having meaningful impact.

As with all forms of leadership, sustainable leadership requires courage, and it begins with caring about our own operational footprint; being open with our environmental commitments and disclosures; holding ourselves to account every step of the way; and promoting a culture of transparency and inclusion.

Leaders can turn this insight into action with commitments to be carbon neutral; to reduce carbon emissions year-on-year; to be powered by 100% renewable energy; to employ a greater percentage of women and minorities in leadership roles; to reach pay parity; to embrace diversity, and to create a more inclusive workforce and culture; along with a commitment to expand community investment programs.

However, meeting these obligations requires a measurement framework that establishes a set of agreed criteria to serve as a benchmark, and standards that enable companies to improve their long-term strategy through a better understanding of the financial and non-financial impact of their business strategies. It also requires a commitment to use data when communicating with investors and other stakeholders about these impacts.

As a company committed to driving social impact through our tools, expertise and data, we at Refinitiv (formerly the Financial & Risk business of Thomson Reuters) have created the Sustainable Leadership Monitor (SLM) to enable leaders in this task. The SLM is a leadership tool that shows leaders their business impact based on over 450 data points of sustainability, governance, citizenship and long-term financial performance.

Since late 2016, we have been collaborating with the World Economic Forum and a group of partners to develop and use this tool as a measurement framework, in order to move from the simple belief in responsible business, to insightful analysis of business impact driven by hard data.

There is compelling evidence that ESG (environmental, social and corporate governance) is becoming one of the single biggest risks faced across most industries and businesses. Investors are increasingly using ESG as investment criteria, as a performance indicator, or indeed as a driver for sustainable investing.

Research shows that over one, three, and five-year periods companies that make investments and focus on ESG metrics deliver a stronger stock performance and better long-term profitability.

ESG data now bears out the high correlation between gender diversity and return on equity. Large-cap companies with the highest ESG rankings also tend to have consistently lower future price volatility than poorly-ranked companies.

The SLM empowers users to visualize trends in specific ESG criteria against their peers and inform decisions that are short term, and long term in nature too.

As a member of the European Commission’s Technical Expert Group for Sustainable Finance, Refinitiv is at the heart of an ecosystem of change-makers championing transparency standards and governance, enabling our customers to make important decisions, which balance short-term business pressures with long-term, positive societal progress.

We empower investors to shift towards sustainable investments and change how the largest businesses in the world think and act.

We have been serving the financial industry with ESG data and solutions for over 15 years and offer one of the richest databases in the industry – a fully transparent resource that is trusted by investors and corporates to drive positive impact and provide comprehensive analysis.

At Refinitiv, we enable our customers to make important decisions which balance short-term business pressures with long-term, positive societal progress. We do this by providing a suite of world-class sustainability-related data and products. These products impact multiple parts of the business lifecycle, from corporate governance and trading platforms to supply chains and investment portfolios.