GRI promotes investor-business dialogue on ESG topics: new discussion paper available
GRI is presenting a new paper, A Closer Look at Water and GHG Emissions Disclosure, that looks into three areas of sustainability reporting: Investor expectations, investor perception and reporting practice.
Climate change is one of, if not the most, pressing issues of our time. Action from the private sector, the largest source of global greenhouse gas (GHG) emissions, is crucial if we want to minimize harm and find solutions to transition to a low-carbon economy. And investors are increasingly considering Environmental, Social and Governance issues in their investment decisions, demanding businesses report on topics such as water usage and greenhouse gas emissions.
The paper identifies four general categories of information that investors look for, and expect to find, in reporting on environmental topics, based on available frameworks and initiatives that focus on the investor perspective.
These categories focus on reporting how climate-related issues are identified, how they are part of strategy, on the collection of data, and about assurance, broadly identifying what members of the investment community are looking for. However, specific data-needs are often linked to specific strategies and motivations, which can only be understood and met through active dialogue between report issuers and data-users.
From interviews with investors, it became clear that several components of reporting on water and GHG emissions do not always meet their information needs. One of the main shortcomings currently identified is the limited disclosure of GHG emissions in the value chain of a business, also known as scope 3 emissions.
Thirty reports available on the GRI Sustainability Disclosure Database were assessed to see how investor perception was reflected in reporting practice. Interestingly, the gap between investor expectations and practice is not necessarily the lack of disclosure, but the depth of disclosure that is needed make the information most meaningful.
To find out more about the research and key elements of water and GHG emissions reporting that need to be improved according to experienced asset managers, read the full discussion here.
The research was done by the GRI with financial support from Alcoa Foundation and builds on the recent release of In-focus: Addressing Investor needs in Business Reporting on the SDGs, which is part of the Reporting on the SDGs Action Platform. It also draws from previous collaboration between GRI and RobecoSAM with support from the Alcoa Foundation, Defining Materiality: What Matters to Reporters and Investors (2015) and Defining What Matters: Do companies and investors agree on what is material? (2016) which sought to uncover whether sustainability report issuers and investors identify the same topics as material.