EcoVadis is helping the Global Reporting Initiative, an independent standards organization, create guidelines for companies on disclosing sustainability performance. A similar effort is the Sustainability Accounting Standards Board, which is developing standards on industry-specific disclosure topics that can have a financial impact on companies and investors. (Michael Bloomberg, the founder and majority owner of Bloomberg LP, is the chair emeritus of the SASB Foundation Board, and another Bloomberg executive, Mary Schapiro, is the vice chair.)
“It took years for financial disclosures to be standardized, so ESG data will likely take just as long,” Guyoton says.
Meanwhile, despite the discrepancies in data and ratings, investors are still hungry for more ESG information given the risks it covers. Pierron says the current diversity of data and ratings “may not be a bad thing for the industry,” as it might help distinguish providers’ strengths and weaknesses. “One provider might be stronger in certain areas, such as carbon emissions, while another is more proficient in waste reduction,” he says.
More important, Pierron says no investor wants to think they’re missing some advantage. “You are likely to be left out if you don’t use the ESG data or ratings available and put yourself at a disadvantageous position when your peers are all implementing ESG analyses in their portfolio evaluation,” he says.
This article was provided by Bloomberg News.