ERM’s ESG RWG gives clients an unprecedented opportunity to engage with ESG research firms and each other, which enables us all to be more effective as we measure, manage and report ESG information."
Mike Wallace
Partner, ERM
ESG Ratings Working Group
Photo credit: Tommy Ju, China
ERM’s ESG Ratings Working Group (ESG RWG) evolved following a webinar hosted by ERM to discuss the COVID-related extensions to the Carbon Disclosure Project (CDP) and Dow Jones Sustainability Indices (DJSI) submissions. The webinar led to a more detailed discussion with our corporate guest speakers from GM and Greif about the need for peer-to-peer collaboration on the entire ESG ratings industry.
In mid-2020, ERM launched the ESG RWG to help companies understand the overall ESG ecosystem, and specifically the ESG ratings landscape. ESG ratings are continually evolving and becoming even more important and influential as the world’s financial markets increase their ESG due diligence activities.
The ESG RWG also builds upon ERM’s unique knowledge gained through the latest Rate the Raters research highlighting the rapid growth of the ESG ratings ecosystem and our research for the European Commission Study on sustainability-related ratings, data and research. This research highlighted the complexities and inconsistencies of the ESG ratings industry and coupled with the work of the ESG RWG, reinforces the need for more comparable and timely ESG data while pointing out the necessity for companies to diligently monitor how their ESG information is being used and interpreted by the market. This includes a need for companies to directly engage with ESG research firms, as well as asset managers and asset owners.
The ESG RWG facilitates an open dialogue directly with most of the ESG research firms mentioned in the European Commission and Rate the Raters studies, as well as influential market players such as TCFD, CDP, the European Commission and the US Security and Exchange Commission. The working group consists of 34 multi-national corporations from across every major industry and represents over $9 trillion in total member market capitalization.
Conversations have helped raise ESG knowledge across the member companies, as well as with the guest presenters. Members are gaining new insights as to how and why ESG rating methodologies change and evolve, as well as how ESG information is used in credit ratings, index creation and a variety of other services and products being created by these research firms. Peer-to-peer discussions have also enabled members to hear how other external stakeholders are engaging on ESG information, such as lenders, creditors, insurers and exchanges. In addition, members are sharing examples of internal team and governance structures that better enable them to respond to the growing demand for ESG data.
ESG influencers from the following organizations have spoken with the ESG RWG:
- CDP;
- European Commission;
- Moody's;
- MSCI;
- S&P Global;
- Sustainalytics;
- TCFD; and
- US Securities and Exchange Commission.
The working group runs through the end of 2021 and will be reconfigured in 2022 based on feedback from the group, as well as ERM’s expanded global understanding of the ESG ecosystem.