Moving ESG Benchmarks From Strategy to Implementation

The performance of environmental, social and governance (ESG) indicators has become a key measure to identify risks and growth opportunities for organizations, particularly in the financial sector. A recent survey stated that 99% of investors consider companies’ ESG disclosures as a part of their investment decision-making, with 74% using a rigorous and structured approach for their analysis. In comparison, only 32% of investors surveyed were using a rigorous approach, according to EY's 2018 Global Institutional Investor Survey.

Companies that have specific ESG goals are often also the most profitable and competitive. In addition, companies that commit to sustainable goals generate more confidence in their brand. The trend also shows that investors are increasingly interested in having their capital allocated to business projects with ESG perspectives. “Sustainability is the capacity to achieve economic prosperity in the long term while preserving natural resources and safeguarding the next generation’s future,” said Carlos Fuentes, Business Development, Mitsui & Co. Infrastructure Solutions.

Fuentes highlighted that over 80% of global investors perceive ESG risks as a key factor when evaluating their investment decisions. He also mentioned that all ESG funds increased their income by 100% in 2020 and by 150% in 2021. 
ESG has materialized in reporting and strategy definition methodologies, too. It was created from the necessity for certainty, transparency and vision of a company’s impact on its surroundings. Current methodologies are sustainability reports, sustainability-focused financial reporting methodologies like TCFD and specific initiatives for emission reduction and renewable energy reports like Carbon Disclosure Project (CDP) and the Science Based Target Initiatives (SBTi). 

Measuring sustainability information comparably across ESG themes can be difficult, leading to variations in reporting. This is where companies can work with stakeholders to agree on how to achieve uniformity in reporting. By doing so, companies can help ensure that their ESG disclosures are correct, helpful to investors and based on the specific goals, values sector, size, time horizon and location of the company.

The path to improving ESG benchmarks can be muddled. It is important to consider that there are different options, such as energy efficiency, which focuses on the reduction of energy consumption and scope 1 emissions; on-site generation, which involves tailored infrastructure for energy generation and off-site generation, which entails the generation of energy through qualified supply and acquisition of products approved by reporting entities like I-RECs .“All strategies must be in line with the requirements of the clients’ reporting methodologies. We, as solutions providers, must understand what our clients are looking for,” Fuentes added. 

Mitsui & Co. recently launched Mitsui & Co. Infrastructure Solutions (MITinfra) to deliver water, power and energy solutions in Mexico. MITinfra will provide companies with infrastructure services offered by Mitsui's two subsidiaries, Atlatec, a water-related business, and Mitsui & Co. Power Development and Management Americas (MPA), focused on power generation.
The company seeks to respond to the current market trend of decentralization, decarbonization and sustainability by providing reliable, competitive and environmentally sustainable water and energy supply to its customers in Mexico. This way, it contributes to the social and economic development of Mexico and its surrounding countries.