Cloudy ESG Transparency
Letter to the Editor, The Globe and Mail
Kathrin Bohr, Senior Partner
Re Big Pension Funds’ Long-Term Push For Sustainability Shifts Investment Climate (Report on Business, Jan. 2, www.theglobeandmail.com/report-on-business/pension-funds-take-major-steps-on-ethical-investing-in-2017/article37470183/)
While it is encouraging to read that pension funds are incorporating environmental, social and governance data in investment decisions, a disconnect persists between this stated commitment and the quality of ESG information.
The Carbon Disclosure Project, the International Integrated Reporting Council and the Global Reporting Initiative have provided widely accepted reporting tools; however ESG reporting continues to be inconsistent, especially in Canada.
Stakeholder Research Associates’ 2017 assessment of ESG reporting reveals that only some two-thirds of TSX Composite Index listed companies publicly disclose some form of ESG information, compared with 93 per cent of the G250 companies, and that ESG disclosure in Canada has not advanced since 2005.
One has to wonder how sound investment decisions can be made when the basics of ESG transparency are not in place. Pension funds and other investment firms should encourage consistent and reliable reporting using available tools. Otherwise, it is still largely an exercise in comparing apples to oranges.