Many ESG targets can best be assessed in comparison to a peer group. Assessing the ambitiousness in isolation often is very challenging.
Yet how to then assemble a peer group?
Typically, firms are grouped by sector. This is how much ESG rating agencies consider peer groups. Sustainability topics are typically similar for issuers operating in the same industry. Hence they will likely have similar ESG challenges and goals.
It also helps to consider the geographic footprint of a company. A firm from a specific operating predominantly in Western Europe will typically have different ESG objectives than one operating in sub-Saharan Africa.
And company size matters as well. The types and granularity of goals will differ for a large multinational than a regional or mid-cap company.
Be mindful that the selection of the peer group can have a major influence on how impactful a company’s ESG goals seem to be. It is not unusual for there to be a major delta between the leaders and laggards in an industry.
How ESG roadmap can help
Through our various tools, you are able to search for ESG goals by industry and by company nationality. Either across all goals or for particular sustainability themes, such as waste management or gender equality.
This can help you fasttrack your analysis. Besides getting suggestions for company’s to add to the peer group, you can immediately assess whether these peers actually have applicable ESG goals and what these goals are.
So within a matter of minutes you can have an initial assessment of how ambitious a particular ESG goal seems in comparison to your chosen peers. You don’t then have to rely on what particular external (and often opaque) ESG data or rating providers opine on a company’s sustainability roadmap.
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