The London Stock Exchange Group (LSEG) has launched a guide on company ESG reporting to investors to encourage more consistent reporting of data. The guide, launched in London this week, was put together by three of the Group’s companies: London Stock Exchange, Borsa Italiana and FTSE Russell, after consultation with their listings, and asset owners and asset managers. Speaking at the launch event for the ESG reporting guide, David Harris, Group Head of Sustainable Business, LSEG, said its purpose was to drive global harmonization of material and relevant ESG information across asset classes.
The guide identifies eight priorities for ESG reporting (see list below). This includes identifying the most important ESG reporting standards including the FSB Task Force on Climate-Related Financial Disclosures and the CDP, and effectively navigating the differences in regulation globally through an “investor-focused approach to reporting”. One ESG reporting priority focuses on issuers proactively communicating exposure to green products and services that enable the transition to a low carbon economy. Harris said that this area was not covered enough when it had huge opportunity.
He added: “The transition is much broader than many think. It includes flood defences, video conferencing and advanced battery storage for example. Investors want to scale up their exposure to green economy products but sometimes the data is not there.” FTSE Russell has mapped the green revenue of 13,000 companies and found 20% had green revenues.
Another ESG reporting priority focuses on what debt issuers should report. Harris said while there were ESG standards and data around use of proceeds from debt, ESG data on the issuing entity was needed too.
Going forward, Harris said there would be engagement with its issuers in Italy and the UK on the new ESG reporting guide.
The guidance has been welcomed by the PRI, speaking at the launch event, its chair Martin Skancke said: “Long-term investors need improved ESG information and markets so far are failing them. There is not enough consistent and comparable information.” He added that the research came at an important time when investors were engaging with the UN Sustainable Development Goals and would need better ESG disclosure and data to support them.The guide is available online on the LSEG’s Global Sustainable Investment Centre
The eight ESG reporting priorities are –
- Strategic relevance: What is the relevance of ESG issues to business strategy and business models?
- Investor materiality: What do investors mean by materiality?
- Investment grade data: What are the essential characteristics of ESG data?
- Global frameworks: What are the most important ESG reporting standards?
- Reporting formats: How should ESG data be reported?
- Regulation and investor communication: How can companies navigate regulations and communicate effectively?
- Green Revenue reporting: How can issuers get recognition for green products and services?
- Debt finance: What should debt issuers report and what are emerging standards here?