I was a keynote speaker at the recent European workshop in Brussels on corporate disclosure of ESG (environment, social and governance) information. These are the headlines from what I told the 60 or so participants about disclosure trends. I'd be interested to hear if you agree or not.
1. Experimentation is rife
Disclosure comes in many forms, including information on product packaging, advertising, print and electronic documents for use by companies internally and externally. Formal reporting, in dedicated CR or sustainability reports and in annual financial reviews, is just one disclosure route.
Disclosure isn’t necessarily public – companies provide information to investors in face-to-face meetings and responding to questionnaires. Smaller companies’ formal ESG communication tends to be mainly with their (big company) customers.
2. Five key trends
Enthusiasm for communicating on ES(G) – large companies are keen to communicate, though the G in ESG tends to be handled separately from the ES.Experimentation, diversity, communication – experimentation means that there is more diversity in communications rather than less (which is what might be expected as disclosure matures). The emphasis is increasingly on communication rather than regulatory style disclosure.More attention upstream and downstream – companies realise that in most cases their most significant impacts are not inside their own walls. They are therefore concentrating more on the products and services they market, and the impacts upstream (in supply chains) and downstream (when the products are used).Increasing focus on positive contribution – what began as defensive disclosure about negative impacts has become more positive. Companies are talking more and more about how their products and services help make the world a better (more sustainable) place.Formal reports are still the major vehicle – they are the basis for other communications. Rigorous, comprehensive report information is necessary to make other communications credible.
3. Five reporting themes Multiple versions – companies are increasingly using different disclosure methods for different audiences, including social media for employees and brochures for customers.Data and targets – every year data collection and target setting tends to get better: more comprehensive, more relevant.Integration – reflecting the growing integration of sustainability in corporate strategies, there is growing interest in integrating ESG information in mainstream reporting. But beware – integrating the information doesn’t mean the strategy is integrated, and even if it is there is a danger of ESG information being lost in a swathe of financial detail.Assurance – limited interest in the UK and US, but more enthusiasm on the continent.GRI – general acknowledgement in the sense of including a GRI index, but little enthusiasm in the US and northern Europe for rigorous adherence to GRI indicators.
That's it in a nutshell (maybe a cocount shell). What do you think?
