Megaport's ESG Assessment Spurs Concrete Sustainability Measures
Challenge
In the realm of investor decisions, ESG ratings have never been more pivotal. A report by The SustainAbility Institute reveals that nearly 100% of investors across various types and strategies rely on ESG ratings. Another survey of asset managers globally found that only 7% did not base their investment decisions on ESG factors, a marked change from the previous year’s 22%.
Despite the ongoing controversies and debate surrounding ESG ratings and their providers — ranging from the failure to effectively communicate to retail investors what ESG ratings measure (ESG-related risks to a company’s bottom line, not the company’s impacts on stakeholders or external issues), to potential conflicts of interest in how ratings are funded — companies seeking capital infusion face substantial pressure to assess their management of ESG risks against industry benchmarks.
This pressure was acutely felt by Megaport, an Australian public company that debuted on the market in 2015. Eager to spur growth in key regional markets — including possibly listing in the U.S. — Megaport aimed to expand its investor pool to include climate and social impact investors.
Solutions Delivered
TripleWin surveyed the global landscape of ESG ratings agencies and selected three that were most pertinent to Megaport’s target growth markets. This selection process involved assessing various factors, such as market share (number of companies rated), regional influence, public access to rated company data, and the agencies’ assessment methodologies, to identify the most relevant partners for Megaport’s sustainability journey.
For the selected agencies — Sustainalytics, MSCI, and S&P Global — TripleWin analyzed Megaport’s data against industry benchmarks and specific peers selected by Megaport itself. Based on this analysis, TripleWin then identified key factors or initiatives for scoring higher on the top five material issues weighted by each agency for Megaport’s specific industry.
Project Learnings
Megaport’s ESG ratings painted the picture of a company “somewhat lagging” in an industry not particularly known for sustainability excellence.
Comparisons with industry peers revealed equal or moderately higher levels of ESG-related risk. This outcome was expected given Megaport’s status as a relatively new company with a unique business model and value proposition, and was further supported by research indicating a positive correlation between company size and ESG scores.
The assessment offered Megaport’s leadership team valuable insights into risk management and strategies for enhancing the company’s ESG performance compared with industry rivals. The data was invaluable for developing Megaport’s ESG roadmap.
Client Outcomes
Following the assessment, Megaport took decisive steps toward raising its sustainability profile. Within a year, the company published its first Environmental, Social & Governance Report, which detailed progress in addressing ESG risks.
Other key outcomes included the appointment of an ESG manager, the development of a comprehensive two-year ESG roadmap, and the implementation of environmental sustainability initiatives. These initiatives, some facilitated or recommended by TripleWin, included the completion of Megaport’s first greenhouse gas emissions inventory, the establishment of an environmental management system, and efforts to reduce emissions from employee travel.
For Megaport’s investors, the Environmental, Social & Governance Report signaled the company’s commitment to managing its long-term ESG risks effectively. By focusing on the most essential ESG ratings providers and following TripleWin’s tailored recommendations, Megaport made significant strides toward enhancing its attractiveness to impact investors.
Experts
TripleWin Advisory is a boutique corporate consultancy focused on circularity solutions for industry. TripleWin offers a suite of tools to support clients in charting a practical, circular and sustainable course for their business. These tools include:
- Carbon inventories and setting science-based and Net Zero carbon goals
- Materiality assessments and sustainability roadmaps
- Building circular business models supported by financial analysis
- Risk scenario models using the TCFD framework
- Workshops and courses to build employee agency and corporate competency
We work with leaders in the following industries: apparel, footwear & textiles; information technology; metals; beauty; food & beverage; healthcare; building construction; human resource management; and retail.
TripleWin Advisory is an approved CDP climate change consultancy Accredited Service Provider (ASP). We are woman-founded, owned and led; a public benefit company.
Megaport offers business customers the largest SDN-based, self-serve network platform in the world. With flexible pricing plans and pay-as-you-go options for connectivity, the company provides fast, secure, and flexible access to data centers in 150+ cities on four continents. Megaport is a publicly traded company, listed on the Australian Securities Exchange in 2015.
Headquarters:Brisbane, Australia
Industry:
Internet software and services
Main Product:
Hybrid cloud and cross-cloud services
In their words
“Before we engaged TripleWin, I was a little overwhelmed by all the conflicting information available on what is best practice for ESG in our industry. The TripleWin team shared a wealth of knowledge and gave us crystal clear guidance on what we should be prioritizing at this stage in our ESG journey. Every interaction we had with TripleWin was friendly and professional and I cannot wait to work with them again."