Month: April 2023

Rimm collaborates with RFI to lead the sustainability module at their Global Virtual Innovation Hub (GVI) FinTech Program for startups and SMEs.

In early February, Rimm was invited to facilitate the Sustainability Module in the Global Virtual Innovation Hub (GVI) FinTech Program organized by the Responsible Finance & Investment (RFI) Foundation in collaboration with HSBC. With participants from around the world, the 10-week program sought to develop FinTech SMEs and startups’ capacities in responsible finance and sustainability, with a focus on the Middle East and North Africa (MENA) region.

The session marked our third collaboration with RFI’s GVI FinTech program, ever since the first iteration in October 2021. Shaleen Shahrin (Sustainability Expert and Strategic Partnerships, Rimm) began with the orientation, where participants were briefed on what to expect from the program over the subsequent days.

“It was great to share Rimm’s sustainability insights with another cohort of RFI’s GVI FinTech program. It is important for FinTechs to understand what sustainability means for their organization, and how they can incorporate sustainability into their business strategy,” shares Shaleen.

We led an ‘Introduction to Sustainability’ session, which focused on the rising presence of sustainability and reporting in the world of small and medium enterprises (SMEs). The interactive session shed light on some key trends driving ESG and sustainability engagement based on our ESG research. We covered various ESG frameworks, materiality and complementary strategies to enhance sustainability reporting, focusing on topics most relevant to the audience.

At Rimm, we believe in helping organizations implement sustainability right. Our program debunked some common myths around sustainability, challenges and solutions to reporting and the long-term risks of greenwashing. One of the topics covered was ‘ESG 2.0’, a new approach to ESG that steers away from minimalist ESG measures that merely satisfy internal and external requirements. It recognizes the importance of embedding ESG policies and frameworks into organizations’ operations and calls for impactful strategies to implement ESG right.

We also led a hands-on practical session, involving a demo of Rimm’s myCSO platform, to demonstrate the capabilities of myCSO in streamlining sustainability management and reporting for SMEs. We were happy to provide free trials of myCSO Essential for the program participants to explore and assess their own sustainability performance and potential for improvement. Rimm also conducted a carbon calculation exercise wherein program participants were able to calculate their Scope 1, 2 and 3 emissions intensities through our platform’s Carbon Calculator feature.

Our engagement with RFI’s GVI FinTech cohort concluded on a successful note as we received the opportunity to share our sustainability insights and capabilities with yet another group of SMEs. We hope to continue engaging with like-minded organizations and individuals in the future with our end goal to democratize sustainability for all.

Looking to automate and simplify sustainability reporting for your organization?

Speak with our team to learn more about our solutions!

There is a wide range of ESG ratings systems available with inconsistent results on ESG scores for different companies. Hear Ravi Chidambaram (CEO, Rimm) on navigating this challenge.

ESG ratings provided by firms like MSCI and Refinitiv have come under increasing scrutiny by corporations, regulators and investors. These companies have been criticized for using opaque, inconsistent methodologies in developing ratings, making it difficult for practitioners to compare ratings between providers or predict ESG-risk outcomes.

Another overlooked shortcoming amongst current major ratings providers is their “one size fits all” ratings system. In this model, virtually the same criteria are used to judge the ESG performance of a company from the United States or Europe with a similar company in the same industry in an emerging market. As the chart below shows, average ratings for emerging markets companies are often lower than companies from the West.

A recent academic paper by Professors Jeff Chen, Zenquan Li, Ting Mao and Aaron Yoon (“Global vs. Local ESG Ratings: Evidence From China”) demonstrates that local ESG ratings were much better than global ratings for predicting how ESG risks can materialize in Chinese companies. This was particularly the case in predicting social and governance risks in areas like corruption, legal violations and employment conditions. The authors conclude that the main reason for this is that local raters had a much better appreciation of the “contextual” nature of ESG risks in China.

ESG is a function of the local cultural, social, political and regulatory environment and varies greatly between countries and regions. For example, many Asian businesses are family-owned with multiple, related party transactions between different family entities. In Western corporate governance, this would normally be a red flag, but if managed responsibly, the risk posed by such related party deals may be benign. In a similar vein, a Nigerian or an Indonesian bank may be unfairly penalized for having greater lending exposure to fossil fuels than a Western bank though those countries derive the majority of their GDP from fossil fuels.

At Rimm, we see a clear demand from our clients in emerging markets for a more localized and contextualized ESG rating model. These companies want a more nuanced rating to better understand performance in the context of the local environment to set more realistic sustainability goals and targets. Local ESG ratings can also drive domestic, green capital markets growth as local investors are better able to price risk and opportunity within a local framework. We have already started developing a local ESG rating system for Indonesia and expect to trial it there soon.

Want to learn more about Rimm’s sustainability and ESG solutions?

Speak with our team to learn more about our ESG solutions.