For many companies, addressing ESG issues is a complex and challenging matter. While climate change and governance dominate investors’ questions, and companies acknowledge the importance of ESG reporting, there are varied views on the financial materiality of ESG topics.
To provide corporates with useful benchmark data, BNP Paribas Exane spoke to 375 managers from 322 listed companies across Europe (Benelux, France, Germany, Iberia, Italy, Nordics, Switzerland and the UK), representing more than €6 trillion in market capitalisation.
The data helped BNP Paribas Exane identify 10 key ESG challenges and how corporates can respond.
Almost half of the respondents said their sustainability department reports to the CEO and nearly two-thirds appoint a board member to monitor ESG issues.
According to three-quarters of respondents, less than 5% of ESG issues addressed by investors have a financial impact.
Management roadshows are the primary interaction between companies and ESG investors ahead of ESG conferences.
Nearly two-thirds of companies integrate ESG into their financial strategy but less than 50% define ESG KPIs.
The main challenge on ESG investor engagement is the heterogeneity of the ESG analysis methodologies of their stakeholders.
Almost all respondents want to retain ESG investors in their shareholder base but only 6% set quantitative targets.
Around one in three companies had been challenged recently on ESG by activist investors, though managing the risk of ESG-adverse voting at AGMs is not yet perceived as a priority objective.
Only one-third of respondents had a clear view of the impact of ESG regulation on the company and more than half acknowledged having difficulties following these regulations.
Only one in three companies aligned their ESG reporting with the EU taxonomy and one-quarter of respondents consider these external ESG databases to be of good quality.
Less than half of companies have a dedicated person in the finance department to monitor ESG issues. Nearly two-thirds do not have a full-time investor relations professional dedicated to ESG.
The BNP Paribas Exane Survey was led by Bénédicte Thibord, head of corporate cash equity (Europe), and Laurie Fitzjohn-Sykes, co-head of ESG research, BNP Paribas Exane. To learn more about the report, please contact the corporate cash equity team at corporate.equity@exanebnpparibas.com