Environment, Social, and Governance (ESG)

Importance of Environment, Social, and Governance (ESG) for Funding / Finance

  • ESG criteria are an increasingly important way for potential stakeholders and/or investors to evaluate companies or assets in which they might want to invest.  Support for ESG funding and finance requires detailed evaluation and demonstration of a company’s or asset’s performance in three areas:
    • Environmental considerations involve evaluating and demonstrating energy use, waste, pollution, and natural resource conservation.  The ESG investor also wants to know any environmental risks a company might face and how the company is managing those risks.  For example, are there any issues related to ownership or use of contaminated land, its disposal of any hazardous waste, its management of any toxic emissions, or its compliance with local government or international finance-related environmental regulations?
    • Social considerations involve evaluating and demonstrating a company’s business relationships with employees, suppliers, and the local community.  Is an asset being developed and/or operated in a manner to enhance the working conditions for these stakeholders?
    • Governance considerations involve demonstrating that a company uses accurate and transparent accounting methods and that financial stakeholders are given an opportunity to participate in important issues.  They may also want assurances that companies avoid conflicts of interest in their choice of management, don’t use political contributions to obtain unduly favourable treatment and don’t engage in illegal practices;
  • Stellae Energy can support local companies to help evaluate and demonstrate compliance with ESG criteria in order to enhance the ability to pursue and capture these sources of funding and finance.  Deliverables could include asset or company sustainability reports in accordance with the Sustainability Accounting Standards Board (SASB) Materiality Map for the particular industry (i.e. Extractives & Mineral Processing, Renewable Resources & Alternative Energy, Resource Transformation, etc.).