What is OpenESG and how does it differ from other ESG rating systems?
OpenESG is the first open, democratic and credibly neutral ESG rating utility. It simplifies Environmental, Social and Governance reporting metrics. This way, a much broader and diverse set of companies (including startups, SMEs, etc.) can have an OpenESG score. This is in contrast to legacy rating systems, which are focused only on publicly-traded companies and the largest private companies. SMEs and startups can find it cost-prohibitive to implement.
Traditional ESG ratings systems assess the risk of ESG factors like climate change to the long-term profitability of companies. OpenESG creates a complementary standard by focusing on the impact that companies have on our planet, people and societies. OpenESG favors action and results over policies and intentions.
How are OpenESG ratings calculated and who is involved in the process?
The OpenESG score is curated by an independent, decentralized, multi-stakeholder Expert Council made up of the world’s leading ESG experts. The OpenESG metrics, the OpenESG scoring methodology and all decisions to modify them are curated by the Expert Council, made public and captured on the blockchain for immutability. We believe that radical transparency can restore trust in ESG standards.
What are the benefits of using the OpenESG rating system?
OpenESG is easy and accessible to all companies, of all sizes and stages of development, in all industries and countries around the world. Scoring your company or products will be free and simple to do.
All companies can benefit from building OpenESG impact metrics into their business models. Finding ways to reduce the negative impact of your business drives innovation and cost-savings across the company; employees and customers feel better about your brand; access to capital may become easier, especially for companies that have never reported before.
How can companies get rated and what information is required?
Companies can enter their own voluntary disclosures through an online portal or questionnaire. The OpenESG metrics focus on the material impacts that companies have on the world around them, therefore information such as energy intensity of production, percentage of waste to landfills, wage gaps or measures to fight corruption will be required to obtain a score. OpenESG will also aggregate third-party data, contributing many of the benchmarking and indexing compliments to the score.
Whether a company’s disclosures are verified and audited, or not, will be clearly visible in their scores. The OpenESG metrics and scores will evolve over time in real-time as new ESG issues and impacts come to light: company scores will accordingly be updated automatically.
How can investors and consumers use OpenESG ratings to make informed decisions?
We aim for the OpenESG scoring infrastructure to become ubiquitous through our network of partnerships and affiliates. Connecting ESG factors to impact will make scores more understandable, transparent and reliable for consumers and investors alike. While most consumers are still unfamiliar with ESG scores, research has shown that most consumers want to purchase from ethical and responsible companies. We want to mainstream ESG thinking into consumers’ daily behavior (like nutritional content has become ubiquitous on food packaging). From an investor perspective, OpenESG scores, data and analytics will provide new perspectives on existing, rated companies and open a whole new swath of companies for consideration, especially in emerging markets.
How can the OpenESG rating system promote sustainability and hold companies accountable for their actions?
We believe that businesses can be a leading force in shaping a more equitable and sustainable world - provided incentives are aligned. Our current economic systems tend to incentivize short-term, extractive and exploitative business models. We believe that increased transparency and accountability about the true impacts of companies on our planet, people and societies will support the emergence of more regenerative economic models and business practices. Leveraging emerging technologies like blockchain in our scoring infrastructure will increase transparency and accountability.