Higher ESG Scores Lower Cost of Capital
The case for accelerating investments in sustainability grows every day, but current methodologies and solutions for tracking sustainability scores have been fragmented given the myriad of global regulatory standards. Disconnected data sources and inconsistencies in reporting quality due to the diversity of formulas and multiple models lead to subjective backward-looking reporting, while the real step change would be to objectively improve forward-looking strategic and operational imperatives. By placing environmental, social and governance (ESG) and sustainability issues at the heart of business strategy in general, and supply chain in particular, new value opportunities can be unleashed to preserve or create competitive advantage through launching new sustainable products, sourcing and packaging alternatives, governance of product flow, etc. Higher ESG scores correlate to lower cost of capital, making supply chain innovation around sustainability a no-regret investment.