‘Net Zero’ and ‘Nature Positive’: the formula for sustainable development
Apr 17, 2023
Sustainable
In a changing world, sustainability is emerging strongly as the strategy to address global challenges and move towards a more socially and environmentally responsible future.
Ecological and social awareness has awakened with renewed force in recent years, and this is reflected in the increasing sustainability regulations currently being developed.
This implies a need to integrate sustainability into management, as it is a challenge that everyone, but especially companies, must face to improve their long-term competitiveness, prevent and mitigate risks and seize opportunities. In short, to ensure its viability in the medium and long term.
For this reason, it is essential to have tools to assess and compare their sustainability commitments and objectives, as well as their degree of progress towards achieving them.
Sustainability is emerging strongly as the strategy to address global challenges and move towards a more responsible future
In this scenario, sustainability indices and ratings are valuable travel companions, charting a path of transparency, innovation and progress towards a greener and more equitable world.
Sustainability ratings are tools that measure performance with respect to the different areas related to sustainability (environmental, social and corporate governance); these are the so-called ESG criteria, which take into account, inter alia, the sector and the operating context of a particular company. The result determines the presence of the assessed companies in sustainability indices.
In this sense, they are a key part of stakeholder reporting. This is especially true for investors, who are increasingly demanding greater access to accurate and complete information on companies to enable them to understand how these generate value now and in the future based on information on the overall situation of the companies. Not only in economic terms but also in terms of management: strategy, business model, risks, performance, etc.
Sustainability indices and ratings are valuable travel companions, charting a path of transparency, innovation and progress
In this way, the annual assessment embodied by sustainability indices and ratings allows the different external agents, such as investors, to quickly and easily obtain useful information on the company’s performance in the field of sustainability. In many cases, this complementary information can be very useful for their analyses in decisions on shaping their investment portfolios.
In addition, the information obtained after the assessment is essential to conduct materiality analyses and determine action plans.
Among the best known sustainability indices are the Dow Jones Sustainability Index (with 600 indicators giving an overall score between 1 and 100) or the FTSE4Good Index (which analyses 300 indicators to create a ranking of companies listed on stock exchanges around the world).
1. They collect data to measure and compare the performance of companies in a standardised way. This makes it easier for investors, or any other stakeholders, to make informed decisions to assess risk management or opportunities.
2. They establish scores or rankings to create incentives for improved sustainability performance. The best performing companies have greater visibility and a wide range of opportunities open to them (access to financing, public procurement, consumer preference, etc.).
3.They promote transparency and accountability, fostering greater corporate responsibility and helping to identify areas for improvement.This has a positive impact on the confidence of investors and consumers, who can assess a company’s impact on the environment.
4.They contribute to regulatory compliance, as growing numbers of regulators require sustainability reporting.
5. They foster innovation and competitive improvement with targets and progress measurements that help identify strengths, detect areas for improvement and develop new solutions. In turn, it is a drive to meet the demands of today’s more aware consumer and to attract the best talent.
The energy sector is an example of a sector in which sustainability indices and ratings play a very important role, as they are essential for the promotion of more sustainable business practices. Transparent measuring, comparing and communicating is the best way to be accountable and make decisions based on reality.
Enagás maintains a firm commitment to sustainability, which is reflected in all its operations, recognised globally with one of the highest scores in the energy sector in the Dow Jones Sustainability Index (88/100), the highest ESG rating in its sector in the FTSE4Good Index (4.5/5) and sector leadership in Bloomberg’s Gender Equality Index in 2023.