Companies, Investors Just Can't Agree on What to Report

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By Andrea Vittorio

Oct. 28 — Companies and investors still can't agree on where and how to report on environmental, social and governance (ESG) issues.

Most of the biggest companies in the U.S. now issue standalone sustainability reports. But few investors want to see ESG disclosures that way, according to a new survey from PricewaterhouseCoopers LLP.

Only about one-fifth of the small sample of institutional investors and pension funds surveyed said they wanted to see ESG information published separately, using a framework from the Global Reporting Initiative (GRI) that has dominated the sustainability disclosure landscape for more than a decade.

Those investors would rather see ESG data incorporated into financial filings using newly drafted industry-specific guidelines from the Sustainability Accounting Standards Board. Asset owners such as the California Public Employees' Retirement System (CalPERS) and asset managers such as BlackRock are starting to rally behind SASB's approach.

The problem is: none of the chief sustainability officers or other corporates in the survey use SASB—at least in part because its standards aren't yet finalized.

‘Pain Points' for Investors

The San Francisco-based standards developer says many of the topics it has identified already appear in financial reporting, just in boilerplate language.

“The kinds of things that SASB’s addressing have long been known to be pain points for investors,” the group’s founder Jean Rogers told Bloomberg BNA. (SASB’s board is chaired by Michael Bloomberg, founder and majority owner of Bloomberg BNA's parent company, Bloomberg LP.)

One of those pain points is the comparability of data across companies. The majority of companies in the PwC survey thought their disclosures made comparisons easy. The majority of investors disagreed.

Another is quality. All of the companies surveyed were confident in the quality of the sustainability information they report. Less than 30 percent of investors saw it that way.

How to Show Quality?

Investors said they would feel more confident in its quality if ESG data were certified or audited by a third party or if it were incorporated into filings with the Securities and Exchange Commission, especially if a company’s executives signed off on the information.

“I think they intuitively would have more confidence in something that is put forth in an SEC filing than something that’s just put out on a website or in a glossy CSR [corporate social responsibility] report,” Sara DeSmith, who leads assurance at PwC's sustainable business group in the U.S., told Bloomberg BNA.

The commission recently asked for feedback on corporate reporting on climate change and other sustainability issues as part of a broader review of disclosures.

SASB isn’t the only way to get ESG information into financial reporting.

Financial vs. Pre-financial

Companies could submit sustainability reports as an attachment, as the Amsterdam-based GRI has suggested to the SEC. They could also put together integrated reports that combine financial and the kind of “pre-financial” information that shows up in sustainability reports.

Eric Hespenheide, GRI's interim chief executive, says pre-financial reporting on topics like gender diversity and labor practices can act as an “early warning system” for issues that shareholders and other stakeholders should care about.

“You could make a case that, over time, anything left unaddressed could become financially material,” Hespenheide, a former partner at Deloitte LLP, told Bloomberg BNA.

GRI will be able to address emerging issues in a more timely fashion now that it is transitioning from issuing a new installment of guidelines every few years to updating individual topics on the fly.

To contact the reporter on this story: Andrea Vittorio in Washington at

To contact the editor responsible for this story: Yin Wilczek at

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