The Professional Accountants in Business Committee (PAIB) of the International Federation of Accountants (IFAC) has released a report considering trends in investor demand for, and use of, environmental, social, and governance (ESG) information.
The report notes that ESG information is increasingly used by investors to understand an organisation’s key ESG factors and how they impact overall performance over a longer time horizon. The reporting includes an appendix which outlines the core sector-neutral ESG metrics demanded by investors and reconciles them to the Global Reporting Initiative (GRI) guidelines – these include such items as greenhouse gas emissions, water and energy use, workplace health and safety and board effectiveness.
The report also recommends how professional accountants can better support their organisations in responding to investory demands for ESG information, and ultimately improve the management and reporting of ESG performance. The recommendations include:
-Professional accountants should work with their organisations to implement a structured and systematic approach to engaging investors to determine their ESG information needs
-ESG factors and performance information should be incorporated into governance and accountability arrangements to improve information and disclosure quality
-Financial and non-financial performance and outcomes should be linked to improve understanding of sustainable value creation
-Investor needs should be met by material, timely, consistent, and comparable information
-Data that may be dispersed in different parts of the organisation or its supply chain should be brought together to support internal and external decision making.