Bloomberg Markets Strategies Guide 2016: ESG Performance

This originally appeared in Bloomberg Markets Magazine

Getting a handle on environmental, social, and governance information has become more crucial for investor relations officers and other corporate executives. A lot of money is invested in accordance with ESG-related guidelines these days. The 1,380 institutions that have signed the United Nations’ Principles for Responsible Investment, for example, oversee $59 trillion of assets.

In addition, the number of shareholder proposals targeting ESG issues has risen more than 10-fold in the past decade. In the 2015 U.S. proxy season, investors filed more than 400 shareholder resolutions aimed at ESG issues.

To assess ESG performance at your firm or at another selected company, you can use the Financial Analysis (FA) function. Type NKE US <Equity> FA ESG <Go> to analyze Nike, for example. Bloomberg has researched more than 20,000 companies—covering virtually the entire investable universe that discloses ESG data—and tracks data for more than 700 ESG indicators.

To identify areas in which your company’s ESG performance is good or may need improvement, you can use the ESG Scorecard sample spreadsheet. To download a copy, type XLTP XSCR <Go> and click on the Open button. ESG Scorecard assesses a selected company based on the ESG and financial metrics that Bloomberg has identified as most relevant for its sector. You can use the spreadsheet to score and rank your company against competitors and report those results to investors.

To benchmark your company against competitors, you can also use the ESG template in the Relative Valuation (RV) function. Type RV <Go>, click on the Comp Sheets tab and then on the ESG subtab. The metrics displayed on the subtab depend on the selected company and range from emissions and energy consumption to human rights policies.

Increased transparency and disclosure about ESG may help you to cultivate better relationships with stakeholders. That can help build your company’s reputation and valuation.

--Debbie Massiello is an equity market specialist at Bloomberg in San Francisco.