Our experience with ESG or Sustainability analysis for small companies

After having researched the ESG profile or sustainability profile of many small companies, we have met a couple of hurdles on the way.

First of all, the information is limited in annual reports and websites. There is also very seldomly a separate sustainability report.

Therefore, the research will require meetings with the board and the management. This is very interesting, and the steps to the advice on the ESG or sustainability profile are very few.

Secondly, the G of the ESG, the Governance is often an issue as small companies do not see the need of a structured Governance as do bigger companies. the latter may be listed on markets that have strict Governance requirements.

A question to ask is really wether one should require the same on the Governance side for smaller companies as we do require it for bigger companies. Our opinion is yes, but that we at the same time can understand the transition phase may be longer before the Governance is where we would like to see it. But this is an important theme that will be treated separately.

For now, we just conclude that small companies require the same ESG or sustainability analysis, but that the scoring may be treated differently as we cannot require the same for a small company as for a big one. Our opinion is though that even small companies must have a plan to get to an acceptable Governance structure.