A lasting effect of the COVID-19 pandemic on the investigative due diligence industry is the spotlight on environmental, social, and governance (ESG) considerations. Notably, ESG issues have quickly transformed from a talking point to an action item. Major ESG events since March 2020 include global wildfires, a rapid shift to remote work, and numerous corruption scandals related to the supply of PPE.
The topic of ESG is wide ranging and highly subjective. According to an article published in Wealth Professional, “since not all data providers have the same [ESG] methodology, it can be difficult for investors to evaluate all their options.” Consider the following suggestions when incorporating ESG considerations into your company’s investigative capabilities, which are applicable to consumers as well as providers.
Know Your Client
A sound understanding of a client’s investigative goals is imperative for incorporating relevant ESG considerations into their reports. A client seeking pre-transactional due diligence in the renewable energy sector will value investigative insights focused on environmental considerations while a client vetting a c-suite appointment will benefit from a focus on corporate governance. Incorporating client specific information demonstrates a client-first approach which can make the difference between a one-time engagement and a lasting partnership.
An investigative partner with global coverage and in-house linguistic and regional expertise can identify pertinent ESG issues that have escaped English language coverage while highlighting emerging areas of concern. Notably, discreet source inquiries can provide clients with a competitive edge for critical decision making. Conversations with strategically selected individuals can provide context to industry transforming regulations under consideration or offer context to social issues driving consumer behavior. Dive even deeper by incorporating site visits which can reveal concerns obscured by distance or a skilled marketing team. ESG concerns vary by region and country making international expertise an invaluable tool for businesses with an international presence to identify pertinent issues across the ESG spectrum.
Stay on Trend
New ESG concerns can emerge instantly following events ranging from a breaking news tweet to an unexpected industrial accident. Keeping pace with headlines and fluid adverse risk sources, including sanctions and watch lists, requires technological expertise. Utilize AI social media reporting as well as automated risk screening and ongoing monitoring to remain current with the issues most vital to your organization. ESG buzzwords change frequently; this should be reflected by a diligence provider’s monitoring capabilities, both automated and human.
A universal solution for ESG monitoring does not exist. New technologies must be vetted. The regulatory environment is constantly evolving. These are just a few of the reasons why providers of investigative due diligence must be willing to pivot with a myriad of externalities. Make informed decisions supported by investigative reporting incorporating ESG considerations tailored to your company’s informational needs while accounting for the unique footprint of every subject.
Ready to learn more about incorporating ESG concerns into your investigative goals? Contact Vcheck Global to kick-off an investigative due diligence program or to enhance existing investigative capabilities.
Seth Harlan is Senior Associate, Market & Regulatory Affairs at Vcheck Intelligence.