Impact Investing Forum
London. Nov 18-19. (Virtual)
Check Out Your Stock’s ESG Report Card Kiplinger’s Personal FinanceCheck Out Your Stock’s ESG Report Card Kiplinger’s Personal FinanceCheck Out Your Stock’s ESG Report Card Kiplinger’s Personal Finance
Although not page-turners, corporate sustainability reporting is a must-read if you want your investments to align with your values. She says that investors should check to see if the company incorporates ESG into its core business activities. According to the Forum for Sustainable and Responsible Investment, U.S. asset managers manage $17 trillion using ESG strategies. This is 42% more than the start of 2018. Investors are urging firms to disclose more information and transparency about ESG. According to the Governance & Accountability Institute (a sustainability consulting firm), nine out of ten S&P 500 companies now publish sustainability reporting. This is an increase from 20% in 2011. Other reports include the Global Reporting Initiative (GRI), and the Task Force on Climate-Related Financial Disclosuress (TCFD). These reports are not required to comply with disclosure rules set forth by regulators like the Securities and Exchange Commission. They lack the standardization (think consistency, clarity, and comparability) that accounting provides. Louis Coppola (executive vice president and cofounder) says that standardization is needed to allow you to compare Company A and Company B. That’s where the Securities and Exchange Commission is headed. Gary Gensler, chair of the SEC, has asked his staff for new rules to address disclosures regarding climate change and human resource management. He also suggested that fund sponsors be required to disclose the criteria they use to market a fund to investors as “sustainable.” Lawmakers are also calling for greater disclosure. Lawmakers are also pushing for greater disclosure. KPMG’s Hodge says that it is important to verify whether an independent third party has reviewed a company’s sustainability report. These reports can be a valuable source of information, despite their limitations. Here are some things to look out for: In the CEO letter, the chief executives outlines the company’s long term vision for ESG goals. Coppola states that the letter sets the tone. You can get a clear idea of the company’s priorities and important issues. For example, Ramon Laguarta, CEO of PepsiCo (PEP), writes about the company’s commitments to developing green-friendly alternatives for single-use packaging, and to working with farmers to ensure that acreage is managed in a sustainable and resilient manner. This section will help you identify the most important ESG issues to a company over the long-term. This section outlines how the company narrows down potentially thousands of ESG issues and shares its plan for mitigating ESG risks. Carole Laible CEO of Domini Impact Investments, said that an oil company faces different challenges to its business model than an apparel manufacturer. Carole Laible, CEO of Domini Impact Investments, says that an oil company faces different challenges to its business model than, say, an apparel maker. Reports that don’t include a materiality assessment, lack metrics and data to measure success, or aren’t audited by a reputable third party, can be red flags. FIS (FIS), a financial technology company, reported that it had increased the number of women in leadership positions in the United States by three percentage points and decreased its energy consumption by 23%. Laible states that it is important to compare year-over-year data to understand a company’s risk-mitigation abilities. Laible says that if a company dedicates a whole chapter to a topic like “Managing a Sustainable Focused Supply Chain,” such FIS does, it can be assumed that it is a top priority. These index sections are often based upon disclosure standards such as SASB and GRI. They often include links to source materials like an annual report or proxy file. Coppola says that they are great navigational tools.