ESG trends: improving and standardizing disclosure – Reuters

ESG trends: improving and standardizing disclosure Reuters

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Based on the text of the article, the above company and law firm names are generated automatically. As we continue to develop and test this feature in beta, we are constantly improving it. We welcome your feedback. You can use the feedback tab to the right of this page to provide feedback. October 20, 2021 – Investment decisions are influenced by the millennial generation. Millennials demand a greater focus on equity, racial injustice and the environment. This trend is causing the valuation of social, environment, and governance (ESG), to take center stage. However, this trend is rapidly evolving. This trend has been embraced by key institutional investors who have made sustainability their new standard of investment. Corporate directors are responding to the call by looking beyond short-term profits and losses and demanding that their companies address the realities of social change, the challenges and opportunities for engagement with community stakeholders. These directors are often driven by personal commitments to the corporate good. However, they also look at the business side of things, asking hard questions at shareholder meetings, and pushing for more data. Market demands for corporate social responsibility are changing the expectations for corporate fiduciary duty. Indeed, ample evidence reveals that poor environmental performance and undesirable corporate impacts may negatively impact operations, limit access to capital, and cause adverse reputational effects.The Biden administration’s “whole of government” (https://bit.ly/3lToITK) focus on environmental justice, and particularly its Justice40 movement, which strives to drive 40 percent of federal financial investments to vulnerable communities and communities of color, leverages this evolving ESG movement.In fact, the government is looking at these “environmental justice” or “EJ” communities in every aspect of its decision-making across industries and sectors, particularly in connection with climate change and emissions impacts, which are a critical focus of voluntary ESG reporting. The U.S. Securities and Exchange Commission is currently working on a new rule to standardize ESG reporting among registered corporations. Climate risk and impacts will be a key focus. This is a great opportunity for corporate leaders who embrace this moment. Companies and shareholders, as well as the public, are looking for more standardization and better disclosures and reporting on environmental and social impacts. This includes community engagement and commitments. Companies have the opportunity to not only develop and refine their disclosures but also to influence the rules that will be applied. Corporate websites, shareholder reports, and reports to regulatory agencies include more than a mere reference to company performance in the human and environmental space. These disclosures often include graphs on climate change, including greenhouse gas calculations and energy use trends, as well as data and details like employee quality of life surveys, summaries of charitable investments and case studies of partnerships and collaborations with fenceline communities. It is possible that companies that work to mitigate environmental stressors may be granted priority access to private and public capital over those that exacerbate them. ESG risks, such those related to diversity are important predictors of organizational resilience and maximising risk-adjusted return on investments. In many ways, the crux ESG is identifying opportunities and risks that are not easily apparent in traditional corporate financial disclosures. Evolving ESG expectations reflect the notion that anything perceived by the market as materially affecting a company’s long-term value should be measured, managed and reported on — including non-financial, social and environmental information.Companies at the leading edge of both ESG and the public focus on equity are holding related discussions not just in the Boardroom or C-Suite but are engaging employees at all levels of the company and seeking to understand and evaluate direct or indirect impacts, whether local, national, or global. Employees are working to assess sustainability and develop measurable goals. They also help to integrate ESG and other equity considerations such as environmental justice in corporate values and performance evaluations. However, companies don’t have the ability to quantify traditional subjective impacts. Public reports show that corporate executives and board members are looking for guidance on how to make consistent ESG disclosures. They are also concerned about the industry sector-specific variability. Many companies include these new ESG metrics in their financial reports, while others release standalone ESG reports. Public reports indicate that board and corporate executives are looking for guidance on “how to do” consistent ESG disclosures. They are also concerned by the current variability across industry sectors. Many of the SASB sector frameworks require specific disclosures about the number of facilities that are located in or near densely populated areas. GRI requires reporting on “material” topics. GRI requires reporting on topics that are “material.” However, it is up to the company what is material. The SEC’s proposed rule regarding climate disclosures is expected to be published soon. The SEC has established a Climate and ESG Task Force and appointed its first policy advisor for climate and ESG. This is a precursor to the potential rule. The current focus of SEC is climate change, but the Biden administration has closely connected climate impacts to environmental justice. The SEC could soon propose new disclosure rules about ESG concepts such as political contributions, environmental justice, and racial equality in human capital. Companies should also consider how best to describe the organization’s strategy around climate change, economic justice, racial, and economic equity, as well as how to steward land, natural resources, and local economies. The SEC will need to consider cumulative environmental or social effects, as well as actions taken to address climate, social inequity, or other factors. These guidelines cover all aspects of environmental marketing claims. They have been used historically to protect consumers against misleading claims, such as “made with renewable energy” and “fully biodegradable.” Citizen groups are pushing the FTC for a wider application of the Green Guides to marketing claims related to general business operations and human impact. A petition is asking the FTC to investigate whether a multinational energy company is making false claims about green claims. The petition states that the company’s core products are made from fossil fuels and that its operations have a disproportional impact on minority communities. Companies are encouraged to boast about their social justice or environmental achievements through ESG reporting. However, this disclosure and claim should be supported by ongoing due diligence to avoid any challenges and support credibility. ESG disclosures may allow companies to demonstrate the value and realize the benefits of corporate actions that have both environmental and social impacts. ESG disclosures can be used to reflect the value and realize the benefits of corporate actions that impact both social and environmental impacts. The market and regulators are likely to embrace ESG disclosures in this area. It is now that investors, employees, and the public expect more from companies. These opinions do not reflect those of Reuters News. Reuters News is committed to integrity and independence as well as freedom from bias under the Trust Principles. Thomson Reuters owns Westlaw Today and operates independently from Reuters News.

Read MoreESG trends: improving and standardizing disclosure Reuters

How Is ESG Regulation Influencing Investor Behaviour? | Alston & Bird – JDSupra JD Supra

PWC discusses ESG with Taiwan News taiwannews.com.tw

Boards must deal with ESG issues as ‘perfect storm’ of activism gets underway: MLT Aikins lawyer Canadian Lawyer Magazine

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