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PRI and WBCSD partner on ESG data and corporate-investor dialogue

Pair will produce guidance on ESG integration in corporate and investor relations, valuation, incentives and capital allocation decisions

The Principles for Responsible Investment (PRI) and the World Business Council for Sustainable Development (WBCSD) are seeking to “redesign corporate and investor engagement” and “bring much-needed scale and market-based consensus” to the topic of disclosure, by becoming the latest organisations to form a collaboration on ESG data.

 ‘By collaborating we can further develop the tools and data needed for future decision-making and create the incentives and collective action at a scale that can significantly influence the capital costs of companies’ – Fiona Reynolds

The pair, which between them represent 200 companies and more than $100trn of assets under management, say the new partnership will help strengthen the dialogue between investors and corporates, and will result in “recommendations and guidance on the integration of sustainability in corporate and investor relations, valuation, incentives and capital allocation decisions”.

“The collaboration will bring investors and corporates together to clarify how sustainability information is used in the investor-corporate relationship, how businesses and investors can align incentives, evaluation, valuation and decision-making with sustainability considerations related to resilience, impact and outcomes, and support the institutional arrangements that will deliver the sustainability information needed by investors and corporates,” they said in a statement.

The current disruption in financial markets, caused by the global pandemic, has provided an opportunity to push harder on these topics, they continued, because of the clear need for closer links between risk, return and sustainable development.  

Fiona Reynolds, CEO of the PRI, said: “Our signatories continue to tell us that being able to access comparable and meaningful sustainability data is a roadblock to progress when it comes to responsible investment. Working with WBCSD will enable PRI to enhance several channels over which investors have influence – capital allocation and investors’ engagement with companies. By collaborating we can further develop the tools and data needed for future decision-making and create the incentives and collective action at a scale that can significantly influence the capital costs of companies.”

However, she insists, the collaboration will build on existing efforts on ESG reporting – of which there are now many. Last month, the Sustainability Accounting Standards Board partnered with the Global Reporting Initiative to launch a "collaborative work plan" and consider how the two standard-setters could come closer together in the future. In May, State Street said it would bring together a “critical mass of asset managers” to drive consistency and comparability of climate data. Meanwhile, the Science Based Targets initiative is developing an open-source data tool to “enable investors, lenders and others to analyse the climate performance of portfolios and companies, align investment and lending books with temperature targets, and undertake more effective engagement with firms”.

Most recently, influential standard-setter the CFA Institute launched a consultation on its own ESG disclosure standard for investment products last week. PRI was one contributor to the draft, with other input from MSCI, BlackRock and UBS.