Back
Asset Management

A quick way to monitor ESG reporting on the web

Gijs Barends
  • about 1 month ago
  • 3 min read

ESG stands for Environmental, Social and Governance, and represents criteria based on which companies can be evaluated for investment decisions beyond financial factors. Companies often produce ESG reports for investors that care about how the company addresses topics of sustainability, diversity and management among others. Investors increasingly seek to invest in companies that report and make progress on these issues.

Environmental is, for example, about how a company is dealing with climate change, Social is about how it makes sure employees and suppliers are paid and treated well and Governance is about how a company deals with the leadership, this includes pay but also internal audits. 

Using ESG criteria when investing is also called sustainable investing or responsible investing. There are many institutions that are setting standards for the reporting, for example, the Task Force on Climate-related Financial Disclosures (TCFD), but there’s no definitive taxonomy of ESG factors.

Many of the largest investment firms are using ESG and creating special funds with ESG shares. ESG investing is a hot topic but because there are no standards or laws that make it mandatory to have an ESG report, there’s also no good overview of what companies make these reports and how. Especially when you take into account that ESG isn’t limited to publicly traded companies. Private companies are increasingly taking a stance on these issues because clients but also employees demand this. 

We looked into our data to see whether ESG reporting is gaining traction among businesses. Companies that will make an ESG report will in most cases publish this on their website because the report is meant for the world to know how a company is performing on these matters. Additionally, if ESG reporting is becoming more popular, businesses that support companies in creating ESG reports will also mention such a service on their website.

Here, we look at English-speaking countries: US, UK and Australia to see how many websites address the topic of “Environmental, Social and Governance”. One of the first things we see is  a steady increase in the number of websites that mention ESG. For August 2022 we record 6,670 individual hostnames.  

Not surprisingly, among the three countries we’ve examined the US has the largest number of businesses that mention “Environmental, Social and Governance” with a share of 67%, followed by the UK with 25% and Australia with 8%.

To get a better idea what companies mention “Environmental, Social and Governance” on their website, we look at the Standard Industrial Classification (SIC) codes that we assign to business websites.

We can see that among all of the sites that explicitly refer to ESG, 38% can be categorized as falling under SIC 87 (Engineering, Accounting, Research, Management, And Related Services), 12% fall under SIC 73 (Business Services), 10% are SIC 67 (Holding and other Investment Offices) and 9% are SIC 62 (Security and Commodity Brokers, Dealers, Exchange), the remaining 31% fall under a diverse set of other SIC scores.

This break-down suggests that ESG is gaining traction in a variety of sectors. Not only are there more companies that report on ESG but there also seems to be a good proportion of businesses that offer services to create ESG reports.

Taken together, the topic of “Environmental, Social and Governance” is gaining traction among businesses. Here, we’ve shown that the web is a good source to not only see ESG trends but also to understand in which sectors ESG emerges as particularly relevant.