Trade And Supply Chain

1. ESG analysis: An essential part of the investment process The outbreak of COVID-19 has intensified arguments regarding the interconnectivity between sustainability and the financial system. Companies nowadays are making disclosures about ESG metrics in their annual report even though it is not a mandatory part of financial reporting. Investors are increasingly using Non-financial elements such as ESG metrics in their analysis to identify potential risks and growth prospects. Investors call on companies to be more transparent about their social, environmental and governance practices as they want to know how their projects impact the world. They avoid investing in companies whose practices may lead to risks in social, environment and governance. ESG education can help a company earn financial and reputational benefits. After becoming proficient, ESG leaders can pass on their knowledge to suppliers and buyers , which will enhance their procedures. This lowers a company’s overall emissions, improves its social impact, and enhances ecosystem sustainability. Procurement and supply chain personnel who get comprehensive ESG training can identify and measure their company’s most significant sustainability challenges and improve resilience by reducing disruptive, legal, and other risks in procurement operations. Over the past several years, ESG has been getting more traction because of the following three factors: 1. Recent industrial research indicates that ESG investing might help enhance risk management and generate better returns comparable to traditional financial investments under certain circumstances. Despite the opportunities and benefits, the difficulties of assessing ESG performance are also becoming more widely recognized. 2. Growing public awareness of climate change risks, the benefits of globally accepted standards of responsible business conduct, along with the need for diversity in the workplace suggest that societal values will influence investors and consumers’ decisions as well as corporate performance. 3. Corporations and financial institutions are increasingly moving away from short-term risk and return perspectives to reflect long-term investment performance. Some investors may want to include more structured alignment with societal ideals, while others may want to improve the sustainability of long-term returns. Investors want accurate methods or tools for tracking ESG performance and identifying ESG risks to steer their investment decisions. They seek to discover companies that, as a

2. result of their ESG-focused business strategies, will have positive financial performance in the long run. Therefore, comprehensive ESG reports and readily available information of a company are critical. With so many parameters in ESG metrics, it can be difficult for investors to know where to start and which areas to focus on. They might seek advisory from companies that can help track ESG and produce reports with all the important parameters, which adds value to investment decisioning and ESG management. A well-implemented supply chain finance program can help buyers and suppliers take corporate social initiatives forward. Sustainable trade finance could provide greater access to liquidity and provide better pricing to support ESG initiatives. With ESG-based programs, ecosystem network will all be benefited from the preferential rates and more sustainable supply chains. The rise of ESG metrics is indisputable, and it is influencing the investment decisions of today and tomorrow.