ESG Metrics for Attracting Nordic Investors: A Guide for Companies

Private investors around the Nordics are increasingly interested in sustainable investments, but many lack the knowledge to make informed decisions about where to put their money. According to a survey conducted by Kantar for Nordea in the autumn of 2022, approximately 4,000 private investors in Denmark, Sweden, Norway, and Finland were interviewed about their attitudes toward sustainable investments. The survey found that in Sweden, as many as 31% of respondents answered that they want to ensure that their investments are managed in a sustainable way, followed by Finnish investors at 27%.

Despite the growing interest in sustainability, the survey also found that a larger portion of investors, just over 40%, say that sustainability is important but not decisive for their choice of investments. This suggests that investors may be unsure about how to evaluate sustainable investment options and may not fully understand the impact that ESG factors can have on investment returns.

To address this knowledge gap, companies looking to generate engagement from Nordic investors should focus on showcasing their ESG metrics in a clear and transparent manner. By highlighting the specific ESG factors that are important to investors, companies can demonstrate their commitment to sustainability and differentiate themselves from competitors.

So, what are some of the top ESG metrics that Nordic investors are looking for? Let’s take a closer look.

1. Carbon footprint

One of the most important ESG metrics for Nordic investors is a company’s carbon footprint. Investors want to see that companies are taking steps to reduce their carbon emissions and transition to a low-carbon economy. This can include measures such as investing in renewable energy, improving energy efficiency, and reducing waste.

Companies can showcase their carbon footprint by providing data on their greenhouse gas emissions and outlining their plans for reducing emissions over time. They can also highlight any certifications or awards they have received for their sustainability efforts.

2. Diversity and inclusion

Nordic investors also place a high value on diversity and inclusion. They want to see that companies are committed to creating a diverse and inclusive workplace, which can lead to better decision-making and improved business outcomes. This includes a focus on gender diversity, as well as diversity in terms of ethnicity, age, and background.

To showcase their commitment to diversity and inclusion, companies can provide data on the composition of their workforce and leadership team, as well as any initiatives they have in place to promote diversity and inclusion.

3. Corporate governance

Corporate governance is another important ESG metric for Nordic investors. They want to see that companies have strong governance structures in place to ensure accountability and transparency. This includes measures such as board diversity, executive compensation, and anti-corruption policies.

Companies can demonstrate their commitment to good corporate governance by providing information on their board composition and independence, as well as their policies on executive compensation and bribery and corruption.

Corporate governance metrics are used to measure the effectiveness of a company’s governance practices. The top metrics include board diversity, CEO pay ratio, board independence, shareholder engagement, ethics and compliance, and board effectiveness. Board diversity evaluates the diversity of the board of directors, while CEO pay ratio compares the CEO’s compensation to that of the median employee. Board independence assesses the independence of the directors, while shareholder engagement measures how actively the company engages with its shareholders. Ethics and compliance evaluate the company’s adherence to ethical standards and regulatory requirements, and board effectiveness measures how effectively the board is functioning.

4. Social impact

Finally, Nordic investors are also interested in a company’s social impact. They want to see that companies are making a positive contribution to society, whether that’s through charitable giving, community outreach, or other initiatives.

To showcase their social impact, companies can provide data on their charitable giving and volunteer activities, as well as any partnerships they have with social impact organizations. They can also use some metrics that typically include the number of people impacted, the quality of life improvement, and the economic impact. By tracking these metrics, organizations can demonstrate their commitment to creating positive social and environmental outcomes, and use the insights to improve their strategies and operations for even greater impact.

In conclusion, Nordic investors are increasingly interested in sustainable investments, but many lack the knowledge to make informed decisions about where to put their money. To generate engagement from this group, companies should focus on showcasing their ESG metrics in a clear and transparent manner, with a particular emphasis on carbon footprint, diversity and inclusion, corporate governance, and social impact. By demonstrating their commitment to sustainability and social responsibility, companies can differentiate themselves from competitors and appeal to a growing segment of investors who are looking to align their investments with their values.

Incorporating ESG factors into your business strategy is no longer an option, but a necessity. By prioritizing sustainability, social responsibility, and good governance, you can attract Nordic investors and gain a competitive edge in the market. If you are interested in learning more about how to attract Nordic investors to your business, we invite you to contact us for a strategy session. Our team of experts can help you develop a comprehensive plan that aligns with Nordic investment preferences and maximizes your chances of success. Contact us today to learn more.