First, depending on the sector in which the business operates, the investment team (supported by the impact team) identifies appropriate ESG issues to be reviewed. In order to make this as practical as possible, Bridges makes it a conversation about operational excellence-using this analysis as a basis for an ESG opportunities workshop with management, which explores existing and potential ESG issues in relation to material stakeholders (e.g., customers, employees, regulators, the local community). In selecting what is material, we consider implications for revenue growth, risk mitigation, the potential for cost savings and productivity (including talent recruitment and retention) and enhancing brand value (including license to operate). The high likelihood / severity (risk) and high potential (return) issues identified through this process are captured in an ESG materiality analysis, which details priority issues and action points which arise. We normally recommend our investment teams to use the SASB materiality map when starting to identify ESG risks and opportunities.
Over the last few years, Bridges has actively supported the development of a common ESG measurement and benchmarking standard by working closely with the non-profit B Lab in developing the B Impact Assessment - the questionnaire that powers the B Corp certification. A partner of Bridges is an active member of the B Lab UK Standards Advisory Council, ensuring this US-founded benchmark is accurately applied in a UK context. The use of the tool has now been incorporated into our assessment of ESG issues.