ESG reporting remains a complicated picture for investors, said several panellists at a recent Clear Path even, which was covered in a new report.
At a recent Clear Path Analysis event, “ESG Investment Leader 2022,” a panel discussion with representatives from Clarity AI, Foresters, Candriam, and KAS Bank covered the topic of how to find commonality in ESG data reporting. The market leaders gave their views on accountability in the chain and why it matters.
Among these areas of were those centred around the reporting challenges that investment managers must look to address - and effective ways to tackle them.
“The challenge is around communicating with the customer,” said Clare Jenkinson, Head of Sustainability, Foresters. “The labelling in regulation [is] coming down the pipeline and I am not so sure words such as transition are going to make sense to our average customer.”
“Europe has regulation around having conversations with investors
in terms of what are their ESG preferences.”
Jenkinson said she believes the industry needs to translate this concept to the broader public in a way that makes sense. This is key, because as one Pwc report from October 2022 said, “The mainstreaming of reputation management and embracing the need to drive progress on ESG issues has resulted in a greater commitment to organisation, governance and reporting.”
For Jenkinson, regulations around this topic are an important part of the puzzle too. “Europe has regulation around having conversations with investors in terms of what are their ESG preferences, so it’s interesting to see how this translates in the UK context too,” she said.
The challenge, she added, is determining how investors can be clear about the topic of discussion. The next step is how to then simplify it, but not so much so that the topic is oversimplified to the point of greenwash.
The thorny issue of whether it is important for the regulators to direct what needs to be disclosed was also of key concern. When insurance investors look at what needs to be reported the conflict of whether this arena should be led by the aspirations that a firm has, what clients are looking for or is if it should be by regulators.
“In terms of complexity, often we will use a matrix approach to prioritise
those issues once we have consulted with your stakeholders.”
“I would look at the materiality aspect in consulting with your stakeholders to identify what issues are important to them in terms of where you are impacting them,” said Jenkinson on how to identify what exact details needed to be reported. “In terms of complexity, often we will use a matrix approach to prioritise those issues once we have consulted with your stakeholders.”
For some sectors, there is already material analysis that has been done, which investors can look to. She also listed the UN Sustainable Development Goals (SDG) as a useful framework for tackling material issues in the field before 2030.
“There is also the importance of embedding this into your purpose as a company to make sure that it all flows and resonates,” she said.
