A group of global investor organisations has urged listed companies and ESG reporting standard setters to do more to agree an approach to the treatment and inclusion of environmental, social and corporate governance (ESG) information in company disclosure and reporting.
“It is important to state clearly that the group believes a workable ‘solution’ can be achieved with the existing data providers and standard setters,” it said in a discussion paper published yesterday.
It said it supported improving coordination of existing reporting frameworks rather than creating new ones but that it was “incumbent on the standard-setting organisations to present a coherent vision of how these standards can and should fit together”.
The group – the Global Investor Organisations Committee – was responding to a request for a more unified view from investors on corporate ESG reporting.
According to the discussion paper’s authors – Kris Douma of the Principles for Responsible Investment (PRI) and George Dallas of the International Corporate Governance Network (ICGN) – the request emerged from a 2016 meeting of the International Integrated Reporting Council (IIRC) and formed the basis for the establishment of the group.
The Global Investor Organisations Committee is made up of the CFA Institute, ICGN, PRI, and four other “investor organisations”.
“The heterogeneity of ESG data users – investors, stakeholders and companies – will remain and is not inherently negative”
Setting out the group’s preliminary thinking in response to that request, the group’s discussion paper noted there was no single set of metrics or single framework that would satisfy all users of ESG data.
“The heterogeneity of ESG data users – investors, stakeholders and companies – will remain and is not inherently negative,” wrote Douma and Dallas.
At the same time, the investor organisations considered it should be possible to serve users’ different needs and “still come to a more unified agenda”.
Making sense of different frameworks
The group acknowledged challenges for companies in reporting ESG information, but encouraged them to identify and disclose material ESG issues and relevant “Key Performance Indicators” as part of their annual reports.
But it would also be beneficial for companies to disclose standardised ESG information at a basic level to complement more customised ESG reporting, the discussion paper said.
Investors would also benefit from members of the Corporate Reporting Dialogue “proactively articulating how its different bodies fit together”, wrote Douma and Dallas.
They should explain what the complementarities were between them but also what the differences or conflicts were, they suggested.
The Corporate Reporting Dialogue is a forum bringing together several organisations that set standards or frameworks for corporate ESG reporting; members include the Global Reporting Initiative, Climate Disclosure Standards Board, the International Organisation for Standardisation and the Sustainability Accounting Standards Board.
According to the Douma and Dallas-authored discussion paper, it was a report from the chair of the Corporate Reporting Dialogue at the 2016 IIRC meeting that drew attention to investors’ fragmented view on corporate ESG reporting as an important issue.
The discussion paper can be found here.
The full list of bodies forming the Global Investor Organisations Committee: Ceres, CFA Institute, Global Impact Investing Network (GIIN), Global Sustainable Investment Alliance (GSIA), International Corporate Governance Network (ICGN), Principles for Responsible Investment (PRI), and the United Nations Environment Programme Finance Initiative (UNEP-FI).
The full list of bodies forming the Corporate Reporting Dialogue: CDP, Climate Disclosure Standards Board (CDSB), Financial Accounting Standards Board (FASB), The Global Reporting Initiative (GRI), International Organization for Standardization (ISO), International Financial Reporting Standards (IFRS), International Integrated Reporting Council (IIRC) and The Sustainability Accounting Standards Board.
- CFA Institute
- Climate Disclosure Standards Board
- Corporate Reporting Dialogue
- ESG integration
- Global Investor Organisations Committee (GOIC)
- Global Reporting Initiative
- International Integrated Reporting Council (IIRC)
- International Organisation for Standardisation
- non-financial reporting
- Sustainability Accounting Standards Board
- Task Force on Climate-Related Financial Disclosures