Purpose of Research:

Institutional investors and banks have been looking at the ESG performance of companies for decades in order to minimize the risk of their investments. Therefore, it is essential to find out which part of their decision, for example, risk premiums asking, will be affected by which factors of ESG. By identifying and revealing those connections, Wenco can help customers to keep close eyes on their own performance and minimize the risk of not only major scandals, but also the cost of financing.

Number of individual students required: 1

Defined Tasks:

Our previous research shows that ESG-Sustainability scoring is an emerging business recently. There are three types of organizations, non-profit or for profit, in the market acting as providers.

1. For-profit

This is the kind of direct competitors. They have two different business models.

• Provide customized sustainability management solution for customers by charging development fee + licensing fee. For example, Rockwell Automation.
• Establish a universally accepted scoring system, and charge everyone who want to access the detail score of a specific company. For example, Sustainalytics, Refinitiv, etc. On top of what we already have looked at, there are still a lot of institutions waiting to be researched, including famous MSCI, Bloomberg, S&P and ECPI.

The latter business model has a bigger customer base than the former because almost all institutional investors have their own model/solution to quantify ESG factors by dollar, all they need is data.

2. Non-Profit

There are also a lot of non-profit organizations providing ESG scores and performance reports. The interval of report renewing is very long, normally from 1 year to 2 years, because of the lack of funding and limited data access. RMI and CDP are examples of this kind of competitors.

3. Affiliations/Academic Institutions

• Affiliations of national governments, guilds and UN are also leaders in this market. Most of them only provide guidelines for companies and investors to build their own dashboard/report, while others also established a forum/community for members to share their research.
• Academics institutions, especially business schools, are actively conducting research and appealing for the adoption of “triple bottom lines” instead of traditional unique economic bottom line. Some of research is quite insightful and provide comprehensive frameworks of appraising ESG performance and connecting the performance to economic bottom line.

Both kinds in this category are not “pure competitors” but rather “semi-competitors” that also have high potential of becoming partners. PRI, TSM, and SASB are examples of government affiliations, while Wharton and Schulich are those of academic institutions.

From demanding side, Big companies, such as Rio Tinto, and institutional investors, such as big banks including RBC, are developing their own appraisal systems, while others are proactively looking for solutions.

Expected outcomes:

1. Interview demand side, including companies, banks, institutional investors to learn:

a. Their own approaches on ESG performance measuring and reporting

b. Their views on currently available products and existing standards.

c. Their expectations on Next Gen products.

2. Interview for-profit organizations to learn:

a. Prices and pricing policies

b. Customers’ feedback on legacy products

c. Trends and plans

3. Summarize the research and make recommendations.

a. Identify ESG factors that can impact financial performance

b. Explain what financial factors will be impacted and how

Remarks:

Students in Richmond, BC will be considered first

Mentorship and supervision will be provided by member Strategic Marketing team as well as Executive Vice President of Corporate Strategy.