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Increasing Transparency in Investments with ESG Reports

Increasing Transparency in Investments with ESG Reports
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In recent years, due to climate and social challenges, companies have begun shifting priorities to include Environmental, Social, and Governance (ESG) initiatives into their business practices. ESG Reports inform investors on how companies are implementing ESG policies.
 
 
With SMA parsing technology, these magazine-style documents are parsed according to the structure of the underlying document with text organized in a multi-level JSON format. Users are able to easily extract specific sections from these documents (e.g., Corporate Strategy within Corporate Governance Reports). This makes it possible to run advanced textual analytics such as advanced word searches, comparisons/ red-lining, sentiment, word counts and more. 
 
Like traditional corporate filings, ESG reports have their own set of reporting guidelines. Below are the guidelines and highlights of the difference ESG document types:
 
 
    1. Sustainability Reports (SRs)- are the tracking and disclosure of ESG goals. This helps firms build consumer confidence, improve corporate credibility and reputations, and establish transparency withink risk management. Within a SR, there are 4 common sectors:
              1. Define Sustainability Metrics and Goals
              2. Measure Progress
              3. Evaluate Progress
              4. Manage Progress
      Within our ~20,500 SR universe, which covers more than 6,500 unique companies dating back to 2005, some of the most common headings found are : 'Waste Management', 'Governance', 'Stakeholder Engagement', 'Risk Management', and 'Human Rights' among many more.


    2. Corporate Social Responsibility (CSR)- Reports highlight the importance of giving back to local communities, as well as increased transparency. There are four categories that a CSR Report can fall under:
              1. Economic
              2. Philanthropic
              3. Ethical
              4. Environmental
      Covering nearly 10,000 CSR reports, across nearly 3,000 companies, popular headings within this document type include: 'Environment', 'Community', 'Health and Safety', 'Supply Chain Management', and 'Employee Engagement'.


    3. Corporate Governance Reports-  provide investors with an understanding of how a company's operations are affecting climate change, internal decision making for business practices, and diversity and inclusion initiatives. The four major sections within a Corporate Governance Report are:
              1. Corporate Strategy
              2. Transparency
              3. Risk Overnight
              4. Executive Compensation
      With coverage on 9,800+ Corporate Governance Reports, spanning 3,100 companies, popular document headings include: 'Board of Directors', 'Corporate Attributes', 'Audit Committee', 'Implementation of Measures for Shareholders and Other Stakeholders', and 'General Information about the Company'.


    4. Environmental Reports- gives companies the opportunity to share future 'Net-zero' emission initiatives and how they plan on making their manufacturing and supply chain practices more sustainable. Major sections commonly found within this document type include:
              1. Need and Purpose of Proposal
              2. Anticipated Actions and Alternatives
              3. Environmental Effected
      With 3,000+ Environmental Reports across 1,500+ companies, the headings found in many documents are: 'Emission Methodology/ Data/ Breakdowns', 'Additional Metrics', 'Details of Engagement', 'Supply Chain Management', and 'Engagement'.


    5. Task Force on Climate-Related Financial Disclosures (TCFD)- Reports focus more on identifying and managing opportunities where companies can improve on climate-related risks and their carbon footprint. The main elements within a TCFD report are:
              1. Metrics and Target
              2. Strategy
              3. Governance
              4. Risk Management

      Covering  920 TCFD reports for 620+ companies, headings found within this document type are: 'Strategy', 'Metrics and Targets', 'Risk Management', 'Governance', and 'Opportunities'. In the last 5 years, 98% of the Top 1,000 Market Cap companies in the world have filed at least one ESG report. With over 43,000 ESG reports and counting available in our universe, we make it quick and easy for investors to identify trends within the ESG landscape.
 

If you are interested in learning more about SMA's offerings, please email us at contactus@socialmarketanalytics.com or schedule a demo on our website!

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