here’s been an increased focus from investors in recent years on ESG investing – the consideration of environmental, social, and corporate governance criteria in investment analysis and portfolio development. As I hypothesized in my predictions for 2021, we’re seeing more companies commit to ESG goals and embedding sustainability into company operations. In fact, interest in this space is on the rise across stakeholder groups, not just from the investment community.
When looking at the United Nations Sustainability Goals (SDGs) there’s clear interplay between the environmental (E) and societal (S) changes that need to take place. Yet when money managers look at ESG investing criteria, climate change tends to be the priority issue. This makes sense to some extent; to drive climate action, all companies need to make changes to their operations to help the world reach the 1.5-degree target. On the other hand, investors should not look at environmental commitments (E) in isolation. Climate change is also an urgent threat to health, food supplies, biodiversity, and livelihoods across the globe. Companies should also be closely assessed for what they are doing from a societal and community standpoint (S). Nature Communications reports those communities most impacted by climate change also tend to be impoverished and aren’t able to take care of their basic needs. These communities can’t wait for climate neutrality or net-zero emissions. There are programs that can be put in place much more quickly to give these communities a better quality of life today.
We can look at this across a number of the United Nations Sustainable Development Goals (SDGs) and their interdependency with climate change.
SDG 1: No Poverty
People living in poverty have the hardest time coping with extreme weather and even more subtle effects of climate change. The increased frequency of climate events makes it harder to earn a living, feed a family, and create a healthy home. There’s an urgent need to make an impact in these communities today, which is where a company’s societal commitments should take centerstage.
At the core of poverty is lack of access and opportunity via economic growth, employment, education, and healthcare. Thus solutions need to be focused on teaching people skills, creating opportunities, and driving systemic change in the community. Companies should focus their resources on resilience building – training, capability building, etc. – not just charity. For instance, many companies participate in disaster relief programs, which are critical in the aftermath of a hurricane or earthquake, but what will truly move the needle are programs created in partnership with governments that help these communities prepare for future disasters and so they can rebound more quickly.
At Bayer, we’ve set a series of commitments to foster inclusive growth and improve livelihoods whether it be for women living in low-and-middle income countries or smallholder farmers.
SDG 2: Zero Hunger
According to the Food and Agriculture Organization, one-third of food produced doesn’t even make it to the table. Yet nearly 1 billion people go to sleep hungry each night. This is a multi-faceted problem that all actors in the food value chain have an opportunity to help solve to drive both societal and environmental change.
Food loss and waste leave a significant carbon footprint. Greenhouse gas emissions are created through inefficient storage methods, indelicate handling of food, and unnecessary transportation among other causes. Addressing these environmental concerns is important, but these solutions need to go hand-in-hand with social programs that companies can drive in partnership with NGOs and governments to actually get more food – with a focus on more nutritious food - to people in need. Programs could range from innovation to create more resilient or nutritious crops, advocating for public policy solutions to help communities divert food waste from landfills, to coordinating more thoughtful donation programs. It needs to be a 360-degree effort across food systems, waste, and nutrition to create lasting impact in these communities.
SDG 3: Good Health & Well-being
We need to think of the environment as a social determinant of health. Climate change has caused many health issues like respiratory illnesses, heart disease, and allergies. People in underserved communities are the most vulnerable. People without access to medical care have a hard time managing or treating these illnesses, often causing them to miss work and fall deeper into poverty.
Healthcare companies have a huge opportunity to help tackle global health challenges. According to the World Health Organization, between 2030 and 2050 climate change will cause approximately 250,000 additional deaths per year from malnutrition, malaria, diarrhea, and heat stress. Moreover, the direct damage costs to health (i.e. excluding costs in health-determining sectors such as agriculture and water and sanitation), is estimated to be between $2-4 billion per year by 2030.
At Bayer, we are helping to expand access to everyday health solutions for 100 million underserved consumers by 2030. With half the world lacking access to basic and essential health services, having improved access to over-the-counter products and nutritional supplements can serve as a healthcare lifeline. This also includes expanding access to health education which is a critical aspect of healthcare that is often overlooked. We’ve also set a goal to expand access to modern contraception for 100 million people in low-and middle-income countries as we know access to family planning is essential to improve not only women’s health, but their economic opportunities and progress towards gender equality
ESG Criteria Should Work Together
Investors should reconsider how they prioritize ESG criteria. While every company must do their part to reduce their environmental footprint, these commitments should not be looked at in isolation. Social commitments can often hold the key to how we can also drive climate action AND create better lives for all people both in the short- and long-term. If we fail at this, if we overlook or undervalue the “S” in ESG, then we will fail at the whole of ESG.
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Don’t Underestimate the “S” in ESG Investing
Photo by Shane Rounce via Unsplash.
January 11, 2022
Investors often mistakenly give privilege to the "E" in "ESG" investing criteria, but there are clear and strong synergies between the environmental and societal changes our world needs, and this interdependency is demonstrated by several of the UN SDGs, writes Bayer's Daniella Foster.
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here’s been an increased focus from investors in recent years on ESG investing – the consideration of environmental, social, and corporate governance criteria in investment analysis and portfolio development. As I hypothesized in my predictions for 2021, we’re seeing more companies commit to ESG goals and embedding sustainability into company operations. In fact, interest in this space is on the rise across stakeholder groups, not just from the investment community.
When looking at the United Nations Sustainability Goals (SDGs) there’s clear interplay between the environmental (E) and societal (S) changes that need to take place. Yet when money managers look at ESG investing criteria, climate change tends to be the priority issue. This makes sense to some extent; to drive climate action, all companies need to make changes to their operations to help the world reach the 1.5-degree target. On the other hand, investors should not look at environmental commitments (E) in isolation. Climate change is also an urgent threat to health, food supplies, biodiversity, and livelihoods across the globe. Companies should also be closely assessed for what they are doing from a societal and community standpoint (S). Nature Communications reports those communities most impacted by climate change also tend to be impoverished and aren’t able to take care of their basic needs. These communities can’t wait for climate neutrality or net-zero emissions. There are programs that can be put in place much more quickly to give these communities a better quality of life today.
We can look at this across a number of the United Nations Sustainable Development Goals (SDGs) and their interdependency with climate change.
SDG 1: No Poverty
People living in poverty have the hardest time coping with extreme weather and even more subtle effects of climate change. The increased frequency of climate events makes it harder to earn a living, feed a family, and create a healthy home. There’s an urgent need to make an impact in these communities today, which is where a company’s societal commitments should take centerstage.
At the core of poverty is lack of access and opportunity via economic growth, employment, education, and healthcare. Thus solutions need to be focused on teaching people skills, creating opportunities, and driving systemic change in the community. Companies should focus their resources on resilience building – training, capability building, etc. – not just charity. For instance, many companies participate in disaster relief programs, which are critical in the aftermath of a hurricane or earthquake, but what will truly move the needle are programs created in partnership with governments that help these communities prepare for future disasters and so they can rebound more quickly.
At Bayer, we’ve set a series of commitments to foster inclusive growth and improve livelihoods whether it be for women living in low-and-middle income countries or smallholder farmers.
SDG 2: Zero Hunger
According to the Food and Agriculture Organization, one-third of food produced doesn’t even make it to the table. Yet nearly 1 billion people go to sleep hungry each night. This is a multi-faceted problem that all actors in the food value chain have an opportunity to help solve to drive both societal and environmental change.
Food loss and waste leave a significant carbon footprint. Greenhouse gas emissions are created through inefficient storage methods, indelicate handling of food, and unnecessary transportation among other causes. Addressing these environmental concerns is important, but these solutions need to go hand-in-hand with social programs that companies can drive in partnership with NGOs and governments to actually get more food – with a focus on more nutritious food - to people in need. Programs could range from innovation to create more resilient or nutritious crops, advocating for public policy solutions to help communities divert food waste from landfills, to coordinating more thoughtful donation programs. It needs to be a 360-degree effort across food systems, waste, and nutrition to create lasting impact in these communities.
SDG 3: Good Health & Well-being
We need to think of the environment as a social determinant of health. Climate change has caused many health issues like respiratory illnesses, heart disease, and allergies. People in underserved communities are the most vulnerable. People without access to medical care have a hard time managing or treating these illnesses, often causing them to miss work and fall deeper into poverty.
Healthcare companies have a huge opportunity to help tackle global health challenges. According to the World Health Organization, between 2030 and 2050 climate change will cause approximately 250,000 additional deaths per year from malnutrition, malaria, diarrhea, and heat stress. Moreover, the direct damage costs to health (i.e. excluding costs in health-determining sectors such as agriculture and water and sanitation), is estimated to be between $2-4 billion per year by 2030.
At Bayer, we are helping to expand access to everyday health solutions for 100 million underserved consumers by 2030. With half the world lacking access to basic and essential health services, having improved access to over-the-counter products and nutritional supplements can serve as a healthcare lifeline. This also includes expanding access to health education which is a critical aspect of healthcare that is often overlooked. We’ve also set a goal to expand access to modern contraception for 100 million people in low-and middle-income countries as we know access to family planning is essential to improve not only women’s health, but their economic opportunities and progress towards gender equality
ESG Criteria Should Work Together
Investors should reconsider how they prioritize ESG criteria. While every company must do their part to reduce their environmental footprint, these commitments should not be looked at in isolation. Social commitments can often hold the key to how we can also drive climate action AND create better lives for all people both in the short- and long-term. If we fail at this, if we overlook or undervalue the “S” in ESG, then we will fail at the whole of ESG.
