As published on internationalinvestment.net, Wednesday 22 July, 2020.
A new report assessing the regulatory landscape for sustainability reporting has found that environmental, social and governance (ESG) disclosure has never been more pervasive globally - and is now firmly in the mainstream of disclosure on organizational performance.
As the market implications of certain ESG topics become more evident, interest in the quality of disclosures is also sharpening, according to the fifth edition of Carrots & Sticks (C&S) report.
The annual report is an analysis of the latest trends in reporting provisions, covering 614 reporting requirements and resources (a substantial increase on the 383 assessed in the previous report in 2016) across over 80 countries, including the world's 60 largest economies.
A new addition in 2020 is insights and context gathered through interviews with policymakers, who give their views on good practices in phasing in ESG disclosure requirements.
Key findings of C&S 2020 include:
Peter Paul van de Wijs, GRI Chief External Affairs Officer said: "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. It is positive therefore that both the range and depth of ESG reporting provisions around the world has grown substantially.
"Yet questions remain on how to address gaps, particularly in the context of the SDGs, and improve coordination to support more consistent disclosure. To address this twin challenge - spreading the practice of disclosure and driving up the quality - needs strengthened reporting requirements, for which GRI will play an enabling role."
Carrots & Sticks is an initiative of GRI and the University of Stellenbosch Business School (USB), with contributions by the UN Environment Programme (UNEP).
Cornis van der Lugt, Senior Lecturer Extraordinaire, USB, said: "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.
"The obvious example is climate-related disclosures. After 2020, the systemic implications of public health and infrastructure weaknesses is likely to receive more attention as well.
"The regulatory landscape both reflects and drives perceptions of what are key material themes. Related is the question of target audience. The landscape continues to display confusion about where best to disclose information and who is supposed to be using different types of information."
C&S was first published in 2006. Its fifth edition (2020) has the addition of in-depth interviews with policy and other decision-makers from 13 countries and regions, including national governments, regulatory bodies and stock exchanges.