Improving performance and investability through ESG due diligence

Environmental, social and governance (ESG) factors present a range of key risks and opportunities that are of material consequence to the long-term financial performance and viability of organizations in the hydropower industry. This paper introduces the principles of, and financial, regulatory, and demand side incentives for, ESG due diligence and integration. An introduction to various ESG scoring frameworks is presented and a hypothetical case study is used to demonstrate that hydro industry firms with low ESG scores are vulnerable to reduced investment. By adopting the analytical viewpoint of a potential ESG-aligned investor, the author identifies a knowledge gap between investor and investee.