Asset Owners Disclosure Project to “integrate” with other NGOs as climate disclosure landscape evolves

NGO says original objective on investor transparency has been achieved

The Asset Owners Disclosure Project (AODP) is to “integrate” with other climate and responsible investment organisations, saying its original objective has been achieved, and that “urgent NGO consolidation” is needed in the space.

According to documents seen by RI, the organisation, which was set up in 2008 to promote climate reporting from asset owners, says that its “board sensed that the original objective to place investor transparency and action at the top of the climate agenda and to separate leaders from laggards had been achieved”.

The AODP’s board includes not just Australian politician John Hewson and CEO Julian Poulter but also international trades union figure Sharan Burrow and Bob Litterman, the former Chairman of the Quantitative Investment Strategies group at Goldman Sachs Asset Management.

Now, it will “aggressively” integrate its ratings system into “other climate and responsible investment organisations” in a bid to drive its expansion once the AODP ceases to exist. The move has been prompted partly by “the opportunity and timing of the Financial Stability Board’s Task Force on Climate-Related Disclosure”, which is due to deliver international guidance in 2017 on climate-related disclosure. The guidance will be voluntary, although many hope it will be adopted into law and regulation in many jurisdictions – especially in Europe.

“This [disbandment] will also progress the urgent NGO consolidation needed to prepare for the calls for mandatory disclosure by all levels of the investment chain and the more efficient dissemination of this data into the marketplace,” the document continues.

The integration is slated to be completed by May next year.
AODP declined to comment on which NGOs it was expecting to integrate with, but said in a statement: “We have already approached the organisations that represent the best potential merger fit to ensure expanded disclosure and FSB alignment.”

The AODP is currently the primary platform through which investors can disclose climate-related information beyond their own websites and annual reports.

Its work has been recognized by investors such as CalPERS, which has said how proud it is to receive a AAA rating from the not-for-profit organization.

Other platforms for investors include the PRI’s Reporting and Assessment initiative and the PRI’s Montreal Carbon Pledge. Corporate disclosures can be made through the CDP.

There have been changes at a number of these platforms over the course of the year. Many in the market see this is a move by all to position themselves as the leading platform through which the guidelines from the FSB’s Task Force can be executed once they come into play.

For example, the CDP has launched a sector-focused investment strategy, including additional disclosure questionnaires for high-risk sectors. This aligns with expectations that the Task Force will provide heightened guidance for sectors such as energy, transport and agriculture.The CDP has told Responsible Investor it was “trying to make sure we’re the best partner for the Task Force’s work”.

The Global Reporting Initiative, which has a wider, environmental, social and governance focus for its disclosure, also launched its first ‘standards’ last month, overhauling its reporting framework.

“We’re trying to future-proof our framework and make it more dynamic and less frustrating for reporters,” explained Eric Hespenheide, GRI’s Interim Chief Executive. “The key difference is that we can now update the metrics and indicators as the world requires them, rather than having a generational approach whereby we redesign the entire framework every few years. With the proliferation of requests for information in the market nowadays, and pressure mounting on companies, we’re trying to make GRI clearer and easier for new reporters.”

The Task Force has said it is likely to recommend that disclosures are made through audited company reports, rather than ancillary documents. This, Hespenheide points out, may take some time to adopt. “Companies will need to feel they have high quality processes in place and be comfortable that these are right for the different legal jurisdictions that this new aspect of a company report will have to pass through. GRI reporting doesn’t require the information to be disclosed through the company report, and so perhaps we have a role as a vehicle to help the Task Force and companies get comfortable with what’s being asked for.”

Last month, the Sustainability Accounting Standards Board (SASB), the US body, launched a data platform “to help users understand and analyze industries’ and companies’ sustainability performance and disclosure”. PwC commented that “as ESG disclosure continues to advance, it’s not hard to see this tool becoming a primary resource for preparers navigating new disclosure expectations”. Notably, the data will be made available on Bloomberg Terminals.

SASB also recently launched an Investor Advisory Group for asset owners and managers “who are committed to improving the quality and comparability of sustainability-related disclosure to investors”. Members include representatives from BlackRock, CalSTRS, CalPERS, Calvert, Goldman Sachs Asset Management and Wells Fargo.

The Task Force will address both investors and companies in its guidelines. There are currently no major platforms that cater to both. Insiders tell RI that the Task Force “will not pick winners and losers” when it comes to eligible disclosure platforms. “It will be up to the market to decide what works,” said one person close to the matter.

In the meantime, the AODP has asked market participants to complete a questionnaire to help it with the “shutdown process”.

“I’m sure you will agree that it is very much in your interests to help us design the best voluntary investor reporting over the next few years,” said CEO Julian Poulter in the letter accompanying the questionnaire. “NGO and reporting consolidation is critical over the coming years and we are proud to be leading this.”