While the investor community continues to call for more useful ESG disclosures, some regulators try to put on the brakes.
By Paul A. Davies, Paul M. Dudek, and Kristina S. Wyatt
Calls for Improved ESG Disclosures
Many in the investor community have spoken out about their desire for more comparable, decision-useful environmental, social and governance (ESG) information to help inform investment decisions. The year 2020 rang in with Larry Fink’s now famous letter to CEOs in which he declared “we are making sustainability integral to the way BlackRock manages risk, constructs portfolios, designs products, and engages with companies. We believe that sustainability should be our new standard for investing.” At roughly the same time, State Street Global Advisors issued its annual CEO’s letter in which it emphasized that “addressing material ESG issues is good business practice and essential to a company’s long-term financial performance — a matter of value, not values.” Also in January 2020, the International Business Council of the World Economic Forum issued a consultation draft calling for the development of common, consistent ESG reporting metrics to bring order and consistency to the ESG reporting landscape. The consultation draft was intended to address the “lack of consistency by which companies measure and report to investors and other stakeholders the shared and sustainable value they create.” Continue Reading