Strategies to Determine When To Engage ESG Assessors
A playbook for managing increasingly important relationships.
Have you ever picked up an “Oh no!” message from your management team—via an Environmental, Social and Governance (ESG) assessor or an investor—knowing that the response to it could require hundreds of hours of work and unleash a host of effects beyond your control?
That feeling is familiar to chief sustainability officers, DEI leadership and others who deal with ESG accountability. Managing ESG assessors effectively is a hot topic as ESG becomes more important than ever to a company’s reputation, operations and bottom line.
Publicly held companies want to be assessed in the best possible light as investor, financial and risk assessors scrutinize their ESG practices. Ensuring a median or leading ESG rating/review helps a company proactively manage its relationships with investors, watchdog groups and advocacy organizations. Good reviews help ensure that a company isn’t caught on its heels reacting to activist investors and groups—and that it doesn’t burn through inordinate resources defending its ESG vision and values.
Privately held companies also benefit from following best ESG practices. Strategic and integrated ESG highly correlates with strong management—an important signal to customers and other stakeholders. It can provide an important measure of transparency and disclosure via accepted industry and global standards.
While most companies see the value in proactively managing their ESG assessor community, many are frustrated, and sometimes even mystified, about how to do so. Few companies have estimated, or allocated for, the time and resources it takes to manage these increasingly important relationships.
A Playbook for ESG Assessor Management
To help companies become more proactive and strategic in communicating with ESG assessors, we’ve developed this brief “at a glance” playbook. It walks you through a series of questions, followed by useful tips and lessons learned from the ever-changing frontlines of ESG. Think of it as a quick reference guide for your internal ESG teams.
1) Do you have an ESG assessor management plan that includes “where we stand” and “how we’ll respond” to the most common questions—ideally, 80 percent of the questions you’d be asked?
IF YES: Does this include an aggregate internal ESG Scorecard that identifies patterns to help predict expected practices among the investor assessors, multi-sector best practice
E&S strategies (e.g., Diversity Best Practice Benchmarks), and industry expectations (e.g., Global Sustainable Tourism Council Recognized Standards in tourism, LEED or Well Certified for facilities)?
IF NO: Create a simple internal method to prioritize what could be hundreds of actions, policies and processes among the most noteworthy investor assessors, together with best-practice benchmarks to advance key ESG strategies.
Investing in a private assessment can help you narrow priorities and strategy needs. Given time and resource constraints, the most comprehensive and recognized ESG assessment is the Corporate Sustainability Assessment (CSA) from S&P Global, formerly the Dow Jones Sustainability Indices. Even if you’re not eligible, you may be able to commission the CSA as a service.
2) Do you engage with ESG assessors on a regular basis? That is, do you respond within 24 to 48 hours to inquiries, requests for meetings and clarifications in writing?
Assessors track extensively in writing and have specialist researchers by sector. There is often a rough hand-off in the transition between staff handling your industry or in the case of company mergers and acquisitions. Even more common, misunderstandings lead to incorrect assumptions of how an industry works.
A Few Tips for Responding to Improve the Quality and Consistency of Communications
- Have a clear point of contact for subject matter expertise (e.g., your ESG/sustainability team), and be sure to offer well-prepared back-up contacts.
- Do you know who has been receiving inquiries from assessors in the form of surveys or questionnaires to complete? To what extent do internal subject matter experts weigh in on the response or engage in clarifying responses? Sometimes these queries are directed to different individuals in a company, and score updates are accessible to many in a company. If you do know, are you all aligned on the best practice for responding to the questions?
- Be honest and authentic, open and receptive in your response to ESG reviews. Defensiveness is never helpful and can raise red flags. Ask for more time if you need it; even beyond extensions if it would be helpful. ESG assessors are often accommodating.
- Request a live meeting to talk through concerns and clarify what are often long, detailed emails. There is frequently a huge gap between assessors’ knowledge base and the reality of most businesses. The more live interactions you have with your assessors, the more you can respectfully educate them about your company. Ask others who are affected by assessors’ scores to join on live meetings. It’s good training, and it creates follow-up internal accountability. At the same time, be clear about roles and who will speak. Erroneous information, contradictions and over-sharing can raise unwarranted concerns.
- Never underestimate the value of building a positive rapport with your assessors/researchers. An open, honest attitude is helpful to their work, your internal work, and your credibility. Sometimes, it’s unclear to a company what assessors are looking for until they get “dinged” on it, or it’s pointed out as a “need gap” on an internal roadmap toward better reviews. We see many instances where a company already has some level of ESG activity, but hasn’t communicated it in the right places on the corporate website using the terms or phrases that assessors search for.
3) Do you have publicly available, updated information for ESG assessors?
Sometimes, it’s unclear to a company what assessors are looking for until they get “dinged” on it, or it’s pointed out as a “need gap” on an internal roadmap toward better reviews. We see many instances where a company already has some level of ESG activity, but hasn’t communicated it in the right places on the corporate website using the terms or phrases that assessors search for.
Here are Five Tips on Sharing the Right ESG-Related Information In The Right Places:
1- Labor Relations — When operating in North America or the EU, corporate ESG teams may assume it’s not necessary for their corporate websites to post the sort of information expected by national labor boards or labor relations. This omission will result in a “ding” from assessors.
2- Human Capital Development — Career sites often miscommunicate how companies invest in talent, develop their pipelines, and provide training opportunities beyond compliance and new-hire training. For responses and data which are not made public, many don’t track or manage to voluntary turn over, promotions by type of employee or the amount of investment per employee in training.
Human-Centered Design (HCD) is a large and growing area of concern among ESG investor assessors, especially since the pandemic and its disproportionate effects on entry level or the Black, Indigenous, People of Color (BIPOC) employees. Consider investing more in best-practice HC systems and infrastructure, particularly the deep strategy advice of groups such as Seramount (formerly Diversity Best Practices, Working Mother Media) or DisabilityIn’s Workforce Inclusion, which focuses on accessibility, consulting, and prioritizes long-term mental health and anxiety issues in the workforce.
3- Policies and Stances — Assessors will assume there are no practices or policies in the following critical areas unless they are stated on websites with adequate commitments: Data Privacy; Tax Transparency; Environmental Commitments/Policy; and Compliance, such as Anti-Money Laundering (if applicable). It’s critical to be public and transparent about these key governance features. The bar for disclosure gets higher every year.
4- Language — Using the right language or keywords is important for autoscans and web-scrapers in publicly available information, including 10Ks, ESG Reports, and websites. Terms such as “climate,” “policies,” “commitments,” “code of conduct,” “targets,” “sustainability,” “diversity,” and “governance” are important to use as long as they honestly describe sustained corporate activity.
5- Press releases and social media do not usually account for better ESG reviews. Sadly, however, negative media is often picked up by qualitative assessors such as Morgan Stanley Capital International - even when it’s a business partner issue, inaccurate story, or immaterial topic (such as a labor strike in <1% of markets). First rounds of assessor reviews often mention such media stories. To avoid false assumptions and erroneous stories, update your FAQ page often; for example, publish your COVID safety policies. Make sure you have a proactive CSR/Sustainability/DEI media relations strategy. Keep media relations strong and create every opportunity for accurate reporting.
4) Do you and everyone responsible for the key aspects of ESG understand what’s driving your assessors’ reviews? Do you understand the underlying expected practices, strategies and policies behind them?
IF YES: Use your understanding of the review to catalyze and advance your internal ESG strategies. This is particularly helpful to gain support for core social and environmental sustainability measures, strong strategic planning practices, real investment in human capital, and internal transparency for good practice and organizational alignment.
IF NO: A lack of understanding is not unusual, which can be frustrating internally and create doubt among the assessor community. But you can draw on some real patterns in ESG strategies that incorporate sound underlying practices, such as:
1- Grounding strategy in stakeholder mapping, prioritization and analysis.
2- Using materiality assessments to inform key E, S and G strategies.
3- Including short- and long-term goals that consider externalities and context-setting. For example, a company with aggressive 10-year growth goals commits to being Net Zero carbon emissions by 2040. Or, better yet, Net Positive (carbon negative) is the aspiration given climate scientists predictions that the planet is on a trajectory toward irreversible climate disaster IF global emissions continue at current rates.
Another example taking social equity into consideration is that the pool of racially diverse suppliers and management candidates is 3x larger in 2025 (compared to a 2020 baseline). There is a big disparity in the percent spend with certified diverse suppliers relative to the number of companies who are diverse and offering the services/products a company wishes to procure. Additionally, management usually doesn’t reflect the population it serves in terms of racial-ethnic, gender, or disability diversity.
4- Making strategy a healthy balance of E, S and G. Environmental strategy should at least include science-based climate action goals that include Scopes 1, 2 and 3. Sustainability strategy should include values-based risk management; human capital development and management, diversity and equity goals/ targets, human rights, data privacy, ethical lobbying, and tax strategy, and much more. Governance strategy should include organizational alignment, policies, procedures, board governance, and executive/CEO compensation ratio to the average worker.
5- Transparency and disclosure – Assessors look for global frameworks and standards to compare companies within and across industries. The most recognized disclosures to the financial community are CDP (formerly known as Carbon Disclosure Project) Climate reporting. Other disclosures, such as Task Force on Climate Related Disclosures (TCFD) and SASB (now Value Reporting Foundation) are also widely accepted. Corporate ESG or CSR/Sustainability reports are widely expected annually to report on points 1-4 above, using the Global Reporting Initiative (GRI) frameworks.
There are many other third-party certifications, benchmarks and indexes that are well worth reviewing for solid strategies (i.e., the Disability Equality Index, Civic 50)—including numerous sector -specific ones.
Along with frameworks, companies are expected to disclose long-term targets and progress on climate change from the Science Based Targets Initiative and workforce representation in management for gender/racial equity. Rather than reporting measures on inputs such as dollars or hours invested among employees in the community or total diverse supplier spend, more stakeholders expect outcomes-based transparency on its positive or negative impact on society: To what extent is your company saving lives through interventions for opioid addiction? How does its philanthropy and business operations (driving gentrification) affect recidivism of homeless individuals or families? How does corporate diversity relations roles impact retention rates of workforce development programs it funds?
5) Do your management and board perceive Governance to be almost solely about board governance and board/management diversity?
IF YES: This is common, as executives frame what they see or experience firsthand. We suggest finding time to occasionally expose the board and management team to external experts on G best practices. They should also look at G benchmarking studies that briefly detail the practices of top-performing companies in CSA. Seeing what their peers are doing to benchmark can help leadership ground their perspectives.
IF NO: This is great! Consider using your leverage and “starting point” to advance education in the more complex S areas—link it back to values and business cases (if probable), or how future talent expects an employer to authentically invest or play in the social space, including social-economic sustainability, social impact, DEI.
6) Does your company invest in third-party reviews, private consultative services from ESG assessors, or other similar outside parties?
Engaging such a service can get you a quick response, good resourcing on the researcher side, greater flexibility and understanding of internal nuances and turnover—even if there is a “firewall” between consultative services and ESG research analyst teams.
IF YES: Great! Do you have an ongoing subject matter expert (SME) who is responsible and accessible to internal leadership (and under NDA) to stay on top of ongoing updates, changes and expectations among investor/watchdog groups?
IF NO: It’s helpful to invest in a private review of CSA once every few years, and perhaps even a SME for a key area such as DEI or supply chain best practices. CDP gives private reviews and scoring of submissions for a fee.
The Bottom Line
It’s helpful to have someone who is responsible and accountable for ESG assessor management—even if only for a few hours each month. Look for a SME who is internal or regularly accessible to the internal team to ensure that recommendations are implemented, and that accomplishments and progress are captured and communicated on an ongoing basis.
This modest investment can go a long way toward avoiding the fire drills that can arise more often as the community of assessors and watchdog groups grow and scrutiny. Without a responsible SME watching for movement every month, it’s easy to be caught off guard. Many changes to policies, commitments and processes take longer than 2-3 months when a survey window opens and is much shorter than the process to get internal strategies and policies together. Communicating early and often, managing expectations, and being clear about your progress will a long way to create relationships of trust with your ESG assessor community.
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