ESG’s dual meaning

Stuart Kirk, who was head of responsible investing at HSBC’s asset management arm until he infamously criticised ESG at a Financial Times event this summer, wrote a thought-provoking piece last week about overhauling the ESG agenda.

In the article, Kirk clarified that he does, in fact, support ESG, but delved into a problem he considers inherent in the current ESG framework.

It has two completely different meanings, he wrote. “One considers E, S and G as inputs into an investment process, the other as outputs — or goals — to maximise. This conflict leads to myriad misunderstandings.”

Here at Xapien, we are well aware of the complexities of ESG due diligence. Measuring ESG risks to a company’s performance (the input), and a company’s social and environmental impact (the output) is difficult. It requires more nuance than current, unstandardised metrics offer. The vast amount of information available on the internet means that gaining a true understanding of input and output ESG risks takes teams of analysts hours or days.

Combining data-based sustainability metrics with environmental, social justice and transparency goals often makes ESG reporting either overly complex or incomplete.

At Xapien, we are helping companies and investors gain a better understanding of ESG inputs and outputs.

Our fully automated background reports provide rapid early insights on holistic ESG risks, so you can avoid getting bogged down in varied, messy and inaccurate data. They cover and analyse a huge range of ESG concerns in minutes, from topical environmental issues to modern slavery and racial justice.

These insights can be quickly reported to decision-makers, putting businesses and investors back in control of ESG inputs and outputs.