If you’re still half thinking that ESG is a fleeting trend, here’s something that might convince you otherwise: The S&P Dow Jones Indices (S&P DJI) announced the debut of its inaugural ESG index last month. And if one of the largest index providers in the world is taking ESG seriously, then your business needs to be, too.

While the new S&P 500 ESG Index is exclusive to the nation’s largest companies—meaning you have to be in the S&P 500 to be included—it’s a precursor of more to come. Indeed, over the next several months, S&P DJI is set to launch a family of ESG indices based on its other widely tracked small and mid-size company benchmarks.

Here’s how you can prepare your organization to make the cut for the S&P 500 ESG Index:

Get to know SAM.
The S&P 500 ESG Index is constructed based on a set of S&P DJI ESG scores created by RobecoSAM (SAM), a European-based investment boutique and ESG ratings provider. SAM is a separate player from MSCI, Sustainalytics, and ISS. While you may not be as familiar with SAM, its lead role in the construction of S&P DJI ESG indices means your opportunity cost of not receiving a strong ESG rating from this provider is quickly increasing.

Take the Corporate Sustainability Assessment (CSA)
SAM calculates the S&P DJI ESG score based on a Corporate Sustainability Assessment (CSA) that it administers to over 3,500 companies each year based on their inclusion in an S&P Global index. Companies can also self-select to complete the assessment if they do not receive an invitation. This may be worth doing, considering that there will soon be additional indices that will use this score to determine a company’s inclusion and weighting within the lists.

Companies that choose to participate in the CSA are required to complete an industry-specific questionnaire that contains approximately 80-100 questions covering 20 different themes. Companies have from the beginning of April until the end of May to complete the CSA. SAM will complete a full review of the responses between June and August and will publicly release the results in September.

Stay out of the bottom 25%.
The new S&P 500 ESG Index is focused on companies who do good for their environment and community. But getting included in this (and potentially in future indices from S&P DJI) doesn’t require you to be an industry leader in sustainability. Rather, you just need to outperform the bottom quartile of your peers: You need an S&P DJI ESG Score in the top 75% of your respective GICS industry group; those below this mark are automatically excluded. You also need either Sustainalytics ESG coverage or an Arabesque Global Compact (GC) score. Other reasons companies are automatically excluded from the index include exposure to tobacco or controversial weapons or having a GC score within the bottom 5% of the Arabesque GC score universe.

Find out who didn’t make the cut.
Only 329 constituents of the S&P 500 are included in the new ESG index. While seeing who’s in can be important, knowing who’s out can also shed light on what types of criteria SAM and other ESG rating providers believe to be important. The full list of companies excluded from the S&P 500 ESG Index can be found here.

Accept that ESG is here to stay—and get your communications up to snuff.
The evidence that ESG practices matter to investors only continues to mount. We’ve posted several stats about the explosive growth of ESG-integrated assets under management and new ETFs that use an ESG strategy. And now we see investment managers already lining up to use the S&P 500 ESG Index: UBS Asset Management recently launched the first ETF in Europe tracking the newly created benchmark, and S&P DJI is set to license the index to a number of additional firms. Given the sum of assets currently benchmarked against the renowned S&P 500, trends in ESG investing will no doubt continue powering forward.

If you’re ready to start building or finetuning your ESG communications strategy, the advisors at Clermont Partners are ready to help. Contact us today to learn how we can guide you in effectively communicating and getting credit for the environmental, social, and governance practices that investors care most about.