Although there is no standard and uniform environmental, social and governance criteria, they are becoming a crucial aspect of corporate transparency in order to provide investors with quality company data, according to fifth edition of Carrots & Sticks (C&S) database.
The report, which covers 614 reporting requirements and resources, found that alignment in the sustainability reporting field is still falling short, with greater collaboration needed between standard setters, reporters, information users, regulators and policymakers, to streamline requirements and improve the quality of disclosure.
In addition, the agreement on the preferred disclosure venue or format such as having an agreed template for reporting is still lacking.
To date, the report said that the UN Sustainable Development Goals (SDGs) are becoming more commonplace across all sustainability reporting policies. However, SDG 12, 6 and 8 which touch on- responsible business, employment and accountable institutions respectively, are the most widespread although public health and education (SDGs 3 and 4) are expected to grow in use following the coronavirus pandemic.
On a geographical basis, Europe continues to drive the ESG disclosure agenda, accounting for 245 reporting instruments, while the Asian markets (174) are increasingly active. By contrast, North America has a low number of reporting provisions (47), partly reflecting the lower number of national jurisdictions in the region.
“As the pandemic focuses the attention of policymakers on how to achieve resilient and climate-friendly economies, the importance of measuring the impacts of companies and encouraging sustainable practices increases,” says Global Reporting Initiative’s (GRI) chief external affairs officer, Peter Paul van de Wijs said. “It is positive therefore that both the range and depth of ESG reporting provisions around the world has grown substantially.”
Cornis van der Lugt, Senior Lecturer Extraordinaire, University of Stellenbosch Business School (USB), added, “Stock exchanges and central banks are becoming more active in pursuing non-financial reporting requirements. This shows how the economic and market implications of diverse ESG topics are becoming more evident.
C&S is an initiative of GRI and USB with contributions by the UN Environment Programme (UNEP). Last November, C&S struck a partnership with the Reporting Exchange of the World Business Council for Sustainable Development to improve user access to reporting information by aligning their taxonomies.