The Investment Consultants Sustainability Working Group (ICSWG) has published a list of 12 environmental, social and governance (ESG) reporting metrics for public equity and public credit asset managers to report on.
They are based on metrics that the ICSWG’s member firms’ institutional clients are increasingly seeking to collect from asset managers.
They include those already required as part of the Task Force on Climate-related Financial Disclosures (TCFD), such as absolute carbon emissions and carbon footprint, alongside a wider range of social and governance factors, like the independence of boards and violators of the UN Global Compact Principles.
ICSWG said that by covering the metrics in one guidance document, it hoped to help managers focus their efforts to produce appropriate data and ultimately support investors in obtaining the desired level of transparency.
The list also aims to provide clarification across the industry through the use of the ICWG’s new definition of what constitutes engagement, as outlined in its Engagement Guide launched earlier this year, and in preparation for the launch of the group’s broader asset manager principle that are due to be announced in the coming months.
The ICSWG, which was formed in 2020 and counts 19 member firms, will maintain and update the list on an annual basis. It said a number of metrics would be considered in future that currently weren’t included due to coverage and/or methodological issues, including Scope 3 emissions, implied temperature rise, and biodiversity measures.
“This is a massive step forward in standardising the ESG data reporting that managers provide,” said Isio deputy head of ESG research and ICSWG member, Cadi Thomas.
She noted, “Not only will these metrics enable our clients to efficiently assess their portfolios with regards to ESG risks, we hope it will encourage greater efforts to improve scores, which can only create better outcomes for the environment and society as well as members of pension schemes.”
Telefonica UK Pension Plan Trustees chair, Anthony Soothill added, “Pensions are rightly in the vanguard of ESG. We are after all literally investing for the future of our members. However, the absence of a standard approach makes it difficult to assess different products and investment managers.”
He said, “This list, if adopted, would enable investors like us to make decisions based on a set of simple, clear and consistent metrics across the whole range of investment products. “By doing so it would also make what we do on ESG more transparent and understandable to our members. I would encourage all managers to adopt it.”
©Markets Media Europe 2021