Digital Accessibility and Improving Your ESG Score

Accessibility Contributes to A Higher ESG Score

Environmental, Social, and Governance (ESG) investing is not a new phenomenon, but it is somewhat recent that it’s been getting so much attention. Among all the other factors that go into an ESG score, accessibility – as a part of diversity, equity, and inclusion (DEI), fits neatly into the measurement, and any company that cares about their ESG score ought to take stock of their accessibility. Likewise, any investors who care about ESG would do well to look into prospective companies’ accessibility before reaching a decision about whether to invest in them or not.

 

What’s An ESG Score?

ESG stands for environmental, social, and governance. “Using analysts and algorithms, the companies convert ESG metrics like a company's carbon emissions, board diversity, or safety procedures into siloed environmental, social, and governance scores, which are then merged into a single primary rating[1].”

There are 23 ESG data points that measure a variety of goals that make up the three categories, and the scores are calculated by third-party organizations and then usually made publicly available.

The scores range from 0-100, the higher the score meaning that the company is considered to be at less risk of controversy from an investment perspective, and more likely to perform well, both financially and in terms of how the company is perceived. ESG scores are concrete, measurable, and objective. They represent an actual data point rather than a feeling or abstract concept.

They’re also relative to other companies in their industry – as in, of the categories that comprise ESG scores, some will be more heavily weighted than others, and that will depend on the industry the company belongs to. So, if The Hershey Company has an ESG score of 70 (which it does, according to the S&P Global calculator[2]), which is considered excellent, and Salesforce has a score of 48, which is average, that doesn’t necessarily give concrete information about how the two compare[3].

 

Controversy Around ESG

ESG is not without its detractors. Most of the doubts stem from whether or not a good ESG score is a positive indicator for market success. Some of them, unsurprisingly, come from public figures whose companies haven’t scored very well.

The scores are based largely on voluntarily submitted data, which means that the integrity of the data must be questioned – self-reporting gives lots of opportunity to hide anything unseemly. It also seems likely that the kind of data we’re asking for and basing ESG scores on are subject to internalized biases we may not be aware of. Data is data, but how we apply it, how we gather it, and who we get it from is still subjective, and that’s something to keep aware of.

 

Why It Matters Anyway

No matter the flaws, ESG has been gaining importance and attention, especially over the last few years. A McKinsey report states that deposits into sustainable funds, which are based on ESG scores, “rose from $5 billion in 2018 to more than $50 billion in 2020—and then to nearly $70 billion in 2021” and have continued at a similar pace over the first two quarters of 2022[4]. That means that even if the concept is flawed, the market is making it such that ESG matters for the bottom line.

The same report also says that sustainable funds are performing better than conventional ones: “midway through 2022, global sustainable assets are about $2.5 trillion. This represents a 13.3 percent fall from the end of Q1 2022 but is less than the 14.6 percent decline over the same period for the broader market.” While it’s important to remember that how well a fund performs on the market has little to do with how an individual company performs, it would seem that ESG is a reliable predictor for market success.

 

Accessibility and ESG

Diversity, Equity, and Inclusion (DEI) is a vitally important component of the social pillar in ESG. And accessibility is the “inclusion” part of DEI. The social pillar of ESG is arguably the hardest to measure, at least in objective terms, but diversity metrics in staffing and inclusivity as a practice in hiring can easily be tracked. Likewise, how accessible a company’s product is also tells a lot about whether they’ve prioritized inclusion.

While disability inclusion and accessibility are not the same thing, they do overlap. And you cannot be inclusive of people with disabilities if you aren’t accessible.

If you’re a company looking at your business holistically, your priorities might be different from those of prospective investors and customers. If that’s the case, taking obvious steps toward improving your ESG score, among them making sure you have an accessible product, is a good first step.

ESG, though controversial, is a deciding factor in the amount and scale of investments a company will receive, and accessibility is a simple way to improve your ESG score. To improve your digital accessibility, drop us a line and start addressing your accessibility needs.

 

 

 

[1] See here

[2] See here

[3] These two companies were chosen totally at random, other than the fact that both will be recognizable to most readers.

[4] See here