November 11, London: Leading South African equity research company, Austin Lawrence Gidon (ALG), has partnered with Edison Group, the London-based investment research and advisory company, to launch its ESG service in South Africa. The ESG service helps corporates to develop a roadmap, strengthen the strategy and integrate the ESG narrative into an overall investment case, to increase investability and attract new pools of investors.
ALG and Edison can engage with companies at any stage of their ESG journey, with a range of services to assess and enhance their ESG profile, regardless of their size. Services range from performing an internal ESG assessment and producing ESG research, scoring against peers or sectors, or providing an ESG roadmap. Reports are utilised to contextualise the data, develop the ESG narrative and demonstrate the forward-looking drivers of the company to better inform stakeholders and investors.
The impact of Edison’s ESG service is already showing clear benefits, with some client companies showing up to 600% increases in trading liquidity within eight months of product initiation, positive share price developments and inclusion in ESG funds.
ESG is the fastest growing area of Capital Markets, with ESG funds on track to hold more assets under management than their non-ESG counterparts by 2025 and it is rapidly becoming one of the most important factors for companies when engaging with investors. One of the main catalysts for growth in sustainable investing is that investments in ESG have recently outperformed their non-ESG counterparts.
According to research published in the Journal of Sustainable Finance & Investment, stock performance of ESG companies have lower volatility than their peers by 28.67% while also having a positive effect on equity return by 6.12%.
The pace at which ESG has landed and continues to develop has put businesses in a challenging position. Investors now need ESG metrics to be compliant, yet their requirements have not been standardised. Even businesses with mature strategies can be cut off from diversified pools of ESG capital without best-in-class metrics and communication.
The ESG investment landscape can be complex and confusing and many corporates believe they match standards but still get overlooked or fall behind their peers. For companies who want to optimise their ESG journey, outside assistance may be needed to provide objective perspective and analysis.
One company which specialises in such assistance is Edison Group which is not only a leading international research consultancy with more than 400 clients on its books, but also has a strong ESG offering. The service is designed to cut through the complexities and confusion of the ESG landscape, identifying materiality, highlighting strengths and opportunities for growth and mapping the best path to optimise the ESG journey.
Neil Shah, Executive Director, Content & Strategy at Edison Group, said: “With ESG now firmly in the mainstream, it is surprising to some that not all investors have access to the level of information they need to fully analyse and understand ESG data from different companies. This is critical for them to make informed investment decisions. It is vital that ESG disclosure and ESG ratings are standardised.
“With this dedicated ESG service for South African corporates we can help address this issue and ensure there is a consistency of data for those investors so they can accurately assess companies’ ESG criteria and benchmark effectively. Ultimately, our goal is to provide more transparent capital markets in which the access to ESG data has been opened to both companies seeking to prove their ESG credentials and those who are looking to invest in them.”