From Peculiarity to Omnipresence: The ESG Explosion Is Revolutionising Investment Criteria

Cellnex aprueba un nuevo plan quinquenal para asegurar su sostenibilidad como empresa global

In a world committed to achieving a net-zero economy to decouple economic growth from carbon emissions, and with the Paris Agreement on climate re-invigorated by the return of the United States to this vital commitment, companies’ environmental, social and governance (ESG) strategies have taken on a whole new value.

Just a few years ago, evaluating companies’ actions to improve the conditions of their employees, the planet or its inhabitants as a whole was viewed as little more than an exercise in eccentricity. Today, it seems impossible to obtain market financing or attract the attention of investors without concrete, measurable actions, not only in governance but also in everything having to do with managing the business’s impact on clients, employees and suppliers, as well as on the environment and the social and economic milieu.

Investment analysis – which until recently was based on financial ratios, business expectations and return on capital – has started to adopt a much more social component, with both individuals and funds seeking to invest only in companies that pass the sustainability test. At the same time, we are seeing the emergence of financial instruments in which financing costs are contingent on ESG progress.

For the past three years, the market has eagerly awaited BlackRock CEO Larry Fink’s annual open letter to the CEOs of all companies in which his business invests. BlackRock – the world’s largest asset manager, with more than US$600 billion in assets under management – has been warning for years about the need to integrate purpose and sustainability into corporate discourse and has demonstrated, through a survey of its clients, that investment firms plan to double their sustainable assets under management by 2025.

The pandemic, a catalyst

When the coronavirus pandemic dealt the world an unexpected blow, some analysts suggested that action on climate change would slow down. In fact, the opposite turned out to be true: in what was arguably the first sustainability crisis of the century, the focus on the effects of climate change and the need to join forces to guarantee basic services and analyse unforeseen risks only grew stronger.

“The pandemic […] has driven us to confront the global threat of climate change more forcefully,” explained Fink in his most recent missive, in which he took stock of 2020 and reiterated the vital importance of ESG in his investment strategies.
“2020 will be remembered for putting the spotlight on the ‘S’ and ‘G’ pillars as COVID-19 broadened the focus beyond the ‘E’ factor,” declared a recent JP Morgan report, which also noted that the pace of ESG adoption in the asset-management community doubled during 2020.
Cellnex, considered a benchmark in these practices, has integrated into its long-term business vision the conviction that economic profitability is inevitably associated with social profitability, especially after the pandemic.

Environment, Social and Good Governance

“All our actions potentially create or destroy value, including in social and environmental terms, and this is now more evident than ever,” commented Toni Brunet, Director of Corporate and Public Affairs at Cellnex Telecom. ”ESG brings a coherent, consistent, holistic narrative to a set of strategies and processes that are already part of every company’s daily routine. We cannot imagine a company committed to the long term that does not have a policy on environmental impact, energy efficiency, talent development, equity principles, commitment to supply chains, etc.”

Cellnex has long been committed to achieving the United Nations Sustainable Development Goals (SDGs) aimed at eradicating poverty, protecting the planet and ensuring prosperity. In fact, the company’s first action plan in this area – prompted by its initial public offering and validated by sustainability indices such as FTSE4GOOD, CDP, Sustainalytics, Standard Ethics and MSCI – was recently completed with a 90% compliance rate.

Now, after appointing an independent non-executive chairman, Cellnex is launching a new 2021-2025 Master Plan that incorporates the full ESG narrative with high standards of executive control and the involvement of all business units. The plan specifically encompasses the three main pillars designated by the acronym: Environment, Social and Governance.

A recent Barclays report shows that investments totalling more than US$100 billion were channelled into specialised ESG funds worldwide between 2018 and 2020. In 2016, only 27% of large private equity firms had teams of analysts dedicated to analysing responsible investments. Now, virtually all investment firms have sustainability specialists delving not only into companies’ strategies but also analysing their levels of compliance.

“We have to leave our imprint, and this means not only taking actions but also demonstrating and publicising them,” explained Brunet. “The main challenge ahead of us is to extend our specific plans to the 12 countries where we operate, while at the same time demonstrating compliance with our commitments and making them known, which is one of the strategic pillars of the plan.”
Pending standardisation of ESG reporting, Cellnex has already offered a fully integrated format in its annual reports for the year.

“Our income statement is no longer merely a financial expression,” explained Brunet. “We have fully integrated ESG into each year’s annual report, including in the 2020 report, which we will be presenting soon.”

“We are clearly committed to reporting data to justify our performance,” Brunet noted, adding that the company’s actions go even further, “extending upstream and downstream in our supply network and with our clients.”

Upstream and downstream actions with clients, suppliers and other stakeholders are fundamental to sustainability indices and to analysts and investors assessing ESG.

Moreover, it is noteworthy that Cellnex, which in 2020 launched a major programme involving international medical research on COVID-19 and support for the segments most vulnerable to the pandemic, is working in partnership with clients on multiple business activities, ranging from bridging the digital divide to making a decisive contribution to smart and sustainable cities.
Last but not least, the multinational group is finalising the details for the creation of the Cellnex Foundation, which promises to become an expression of Cellnex’s commitment to ESG and a vehicle for communicating the group’s activity in these areas.