Accounting & DisclosureESG

ESG Transparency Goals Create Hard Resource Allocation Decisions

By September 10, 2020 No Comments

The struggle to prioritize reporting requirements for a growing list of ESG standards and frameworks.

Some NeuGroup member companies are struggling to prioritize how to allocate the resources necessary to satisfy a growing list of reporting and disclosure standards as corporates strive to be more transparent about their environmental, social and governance (ESG) records.

  • That was among the key takeaways at a recent Virtual Interactive Session where an ESG officer raised the subject of determining what information is truly useful to investors evaluating companies on sustainability criteria.
  • “I’m just throwing that out as something we’re struggling with internally right now, trying to figure out how to prioritize, because we really recognize that we can’t do everything,” the executive said.
  • In a poll at the meeting, 65% of attendees said they are putting resources toward enhancing their disclosures, suggesting that the issue of resource allocation is widespread.

Operational data: how useful? In response to a question, the executive said that a lot of what is called for by various disclosure frameworks is detailed operational data—some of questionable value.

  • For example, certain frameworks recommend disclosing a company’s number of cyberbreaches, something the ESG officer said raised several questions.
  • “Number one, whether or not you ought to be disclosing that,” the executive said. “How an investor would look at that? What’s a breach? We all know that we’re all vulnerable every day and so some of those numbers aren’t remotely useful to an investor.”
  • One recommendation for navigating all the various disclosure frameworks: Determine what the quality of the data ought to be and allocate resources only to the most useful programs.
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Justin Jones

Author Justin Jones

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