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Recommendations on ESG Reporting

12/30/2021

The Institute representing Certified Financial Analysts (CFA) recently conducted a global survey on reporting by company progress on environmental, social, and governance issues (ESG).  Margaret Franklin, President and CEO of the CFA Institute, noted “Uncovering investor viewpoints is critical at a time when global regulatory policy is in a state of flux concerning the role ESG factors play in the practice of investment management.”  She added, “Our members suggest these debates would be better settled between investors and their investment managers rather than regulators.” 

 

The survey disclosed a disinclination for governments to impose formal ESG reporting although regulatory authorities should be involved in establishing and supporting standards that would be globally consistent.  Accepted standards will be a prerequisite for auditing the status and progress in ESG by companies.  If ESG is integrated into management of companies, investment managers should consider the financial impacts of ESG policy. 

 

During the past three years, producers of food products and retailers have issued their own ESG reports that vary in detail and in many cases are laudatory in tone, concentrating on aspirational goals extending to 2030 and 2050. Respondents to the survey were generally in agreement that “greenwashing” should be discouraged with rules on marketing and claims.