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How does ESG create value?

12th Oct 2023

ESG is here to stay

The appetite for ethical business and a strong Environmental, Social and Governance agenda has been high across the financial landscape since the early 2000s – and it continues to grow.

Sustainability, responsible investment, best practice, transparency and security are relentless drivers in the Capital Markets sector for participants of all kinds, investors and providers included.

And for good reason, with sustainable funds outperforming traditional opportunities by a median 5% (Morgan Stanley: Social Investment Forum Report 2020).

There is plenty of evidence of the role ESG is playing in influencing emerging market expansion, brand repositioning and IPOs.

Layers of value

At the top level there is a growing pool of capital being invested based on ESG value.

Neutralising carbon, decarbonisation and monitoring GHG generation deliver value to the planet, and any company putting these aspirations into practice is highly investible.

Add to this the attractive capacity to sponsor community initiatives around the globe in service of Social Diversity and Inclusion, while fostering trust through good corporate governance, and investors are delighted.

Yet the impact of ESG ripples down to other aspects of market participation. Tier 1 financial organisations will only engage with suppliers who demonstrate clear ESG capability.

Consequently, were the financial sector a stick of rock, Corporate Social and Environmental Responsibility would be written right through the middle.

Competitive Advantage

Happily the best market providers, such as financial technology suppliers, have consistently pursued products and services that offer their customers competitive advantage in agility, performance, sustainability and security.

Where corporations are now seeking solutions to meet their ESG criteria, they are encountering tried and tested technical offerings that not only comply but also accelerate commercial opportunity.

Excellent fintech providers are now dove-tailing better than ever with their customers’ demands, having been quietly anticipating and responding to market needs and ESG challenges for decades.

Market Expansion

Since 2018 ESG has driven a 42% increase in sustainably invested capital. With tech on their side firms are more willing to spin up risk-free trades in emerging markets. New opportunities are arising as smaller companies’ Governance is bolstered by ESG motivated regulatory compliance.

Meanwhile a growing number of B-Corporations offer strong connections with consumers and attract sustainable investment for the benefit of the public.

Increased Trust

Where there is trust, value accrues. ESG capability has become a marker for trustworthy business practices, with transparency and disclosure of interests being at the forefront of market participants’ activity.

Again technology enables trust to deepen as suppliers gain accreditation in a vast array of regulatory approaches, including ISO27001, the Center for Internet Security controls, UK-governed National Cyber Security, and the National Institute of Standards and Technology.

Beeks’ Response

Partnerships and Collaboration

Shared commitment to the values of ESG is compelling market players to establish partnerships to deliver workable and sustainable financial systems.

In Beeks’ case we partner with trade comms leaders IPC to deliver accessible, cloud-based solutions that turbo-charge market participants’ business. We are constantly seeking infrastructure partners with high ESG capability in line with our customers’ requirements; and as we collaborate with others our own ESG preparedness expands and benefits from shared approaches.

Pooling resources also gives collaborators more collateral to support global charities and communities. As well as sponsoring sports teams in Africa and Scotland, Beeks and IPC are beginning an initiative to make donations to local charities following each new Equinix data centre instance.

Solution Efficiencies

Without technology financial businesses would be unable to achieve ESG efficiencies.

The evolution of Cloud hosting means ESG is integrated into the very infrastructure a firm deploys.  Value is derived from the savings achieved through hardware and connectivity streamlining, reducing data centre footprint, power consumption and the need to purchase bespoke bare metal.

Security considerations

Understandably the utilisation of shared Cloud space could pose a threat to highly security conscious trading environments. However the best fintech suppliers are a step ahead, crafting solutions to allay firms’ fears and demonstrating excellent capability in keeping systems, information and data robust and secure.

Beeks Group is highly experienced and knowledgeable about all the different permutations of private, public and hybrid cloud capabilities, allowing shared resources to be harnessed when needed, driving sustainable value without compromising performance and security.

De-risking commercials

Beeks’ appeal to IPC was two-fold. Firstly their knowledge and agility in spinning up new trading environments; secondly their unique subscription model, enabling participants to access new markets without a whole load of up-front capital spend. [include link to IPC Case Study here]

From an ESG perspective this creates value without risk, allowing markets to be explored and monitored for the best returns in a highly controllable manner.

Policy and Technology integration

Beeks are proud to bring our product stack to enhance our customers’ commercial value and ESG contribution.

Beeks’ and partners’ technology ensures ESG policy is front and centre of every infrastructure implementation, creating value for financial businesses of all stripes, including buy-side firms, sell-side firms, inter-dealer brokers, listed and OTC liquidity venues, trade lifecycle service providers, market data vendors, and clearing/settlement firms.   |

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