Problem solver: Which ESG data requests should you respond to?
In this regular article, we ask IR professionals how they would respond to a specific operational issue. In this article, we asked how IR and sustainability teams determine which requests for ESG data to respond to, and how to ensure investors are receiving the ESG information they need.
Abbigael Foster, senior analyst in sustainability at Equinix, says:
Investors today want readily available, decision-useful ESG information on companies in which they invest. Like all public firms, Equinix receives a high volume of ESG data requests from investors, customers and partners. These requests include aligning disclosures to standardized frameworks, responding to ratings and rankings and providing supplementary information via custom surveys or engagements.
Having a comprehensive and robust strategy around ESG disclosures is critical to being able to respond to these various requests. Annual disclosure for Equinix begins with our integrated shareholder wrap, which includes ESG highlights and is disseminated to more than 10,000 investors. Shortly after this, we issue our annual sustainability report and our sustainability website, which is a deeper dive into our ESG strategies, progress and metrics.
We also decide which ESG reporting frameworks most frequently requested by our stakeholders we should align with, and where to disclose. We use the GRI standards in our CSR report, SASB in our 10K and the TCFD framework on our website.
To ensure raters and rankers have access to accurate information, Equinix responds to widely followed groups such as CDP, S&P Global, ISS, MSCI and Sustainalytics. We prioritize these by evaluating who uses the data or results, whether scores tie into benchmarks or ESG indexes, how data is made public and which stakeholders are requesting our participation.
Requests for supplementary data are inevitable with the constantly changing ESG landscape, and we engage directly with our stakeholders to provide additional details on our strategy and progress as appropriate. ESG measurement and transparency are critical to Equinix’s ESG program success and are increasingly valued across the industry.
Hunter Wells, vice president of IR at Century Communities, says:
I don’t believe there is a single right or wrong answer for this: one framework may not be fully comprehensive. But there are certainly a few key considerations you should ponder to help you narrow things down.
Every issuer will be at a different stage in its ESG journey, will be benchmarked against a unique set of peers and will have a distinctive shareholder base with its own set of expectations. I would begin by polling your top shareholders to see whether they have any preference and researching whether any of your largest institutional investors have stated their support publicly for any particular methodology or framework.
Additionally, outside of your investors, you should think about other stakeholders whose input should be considered, such as your board of directors or even your top customers.
From there, you should have a better idea of your audience and what frameworks they are familiar with or have a preference for. Next, you will need to determine what resources and personnel you will have dedicated and available for ESG reporting.
I appreciate the simplicity of SASB as it has a concise a set of standards for more than 70 different industries and it can be used in conjunction with other frameworks so, looking ahead, we can efficiently build upon our ESG reporting disclosures and add additional frameworks.
For most issuers, one or a couple of the most commonly used frameworks – GRI, SASB, TCFD and CDP – should provide a suitable start.
This article was originally published in the Fall 2021 issue of IR Magazine. Click here to access the magazine.