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Sustainability. Is it time for a new tonic?

Anyone who’s tasted Fever Tree Tonics knows they’re good. Very good. In fact, it’s a wonderful success story based on fresh thinking, a commitment to look at things differently and challenge the status-quo. Founders Tim Warrillow and Charles Rolls point out that “if three quarters of your gin and tonic is the tonic, make sure you use the best.”

Almost 30 years on from Bruntland, in 2015, the United Nations produced a collection of 17 distinct goals, known as the Sustainable Development Goals (SDGs), which have the principle aim to achieve a ‘better and more sustainable future for all’. These goals are fundamentally in place to combat the most severe global challenges to equitable development and include a mixture of environmental, social and economic objectives. To reach these targets requires collective action from individuals, governments and businesses alike.

In the theatre of global sustainability, business has the potential to play both the hero and villain role. Businesses have the capability and transformative power to pioneer and develop novel technologies and innovations to tangibly create more sustainable futures. Equally, businesses represent some of the highest emitters of greenhouse gases, largest consumers of natural resources and large employers of workers presenting a potential obstacle to sustainable development.

Adopting a responsible business strategy that will achieve long-term financial value whilst facilitating and enhancing both society and the planets capability to thrive is therefore fundamental for ensuing sustainable development. This essentially involves amalgamating financial values with core non-financial values and putting these at the centre of business strategy. ESG data offers an attractive avenue in which to help achieve this.

A significant paradigm shift has already emerged in the way business is conducted across many sectors, moving away from a ‘profit at any cost’ model, towards striving for more sustainable and responsible industry values. This is demonstrated by the transition in the demand for greener industry, including the drive towards renewables and away from fossil fuels in the energy sector, the switching from fossil fuel powered vehicles to electric vehicles in the automotive sector and changes in food preferences and agricultural practices. The drive for these shifts has come predominantly from changing consumer attitudes and preferences accompanied by government legislation and policy.

Where does ESG data come into this?

Following the trend towards ethical and sustainable business, consideration of ESG factors has become increasingly prevalent. Companies that embrace sustainability and responsible business stand to gain a significant advantage over those that are committed to outdated business models of growth. Quality ESG data can be used to ensure that organisations are operating in a way that facilitates sustainable development, are complying to legal standards and legislation, boost company image and provides an opportunity to enhance innovation and new ideas to develop and gain a competitive edge. Not only does ESG data help companies operate more ethically and sustainably but accounting for ESG factors makes financial sense. To elaborate, ESG data can be utilised as a powerful analytical tool that leads to smarter decision making and improved returns on investment. By using ESG data effectively, business can manage potential future risks to growth, such as vulnerability to climate change or labour relation challenges and choose smart investment in long-term sustainable options. ESG principles are already widely adopted; for example, in France, 75% of institutional assets are managed under ESG considerations.

In a world that is becoming increasingly exposed to novel risks and opportunity where business transparency, access to data and information and environmental protection are at the forefront of global consciousness, the value of ESG data cannot be overstated.