• Traditionally, small cap companies tend to allocate fewer resources to ESG topics, primarily because they are in a different financial maturity cycle than larger companies.
• Private founders or management tend to hold a significant stake in small and medium-sized companies.
• Small cap companies are the backbone of the economy and the analysis of sustainability risks and opportunities is therefore all the more important
• Human Capital Management (a key social factor) may be a driver of innovation and long-term performance, particularly in the small cap segment.
• In the small cap segment, dialogue and engagement can have a substantial impact on company strategy and ESG commitments.

This session will analyse why small and mid-cap companies generally have lower ESG ratings than larger market capitalisation companies. It will detail how, a combination of best-in-universe and best effort approaches may be beneficial. Given that ESG rating coverage, differs among traditional third-party ESG rating providers, the session will explore an ESG analysis methodology that eliminates size and information biases and can be used as an essential tool for risk mitigation and value creation in the small cap segment.