US sustainable investment forum raises concerns over integrated reporting (amended)*

US SIF fears diminished ESG reporting

The US SIF, the Forum for Sustainable and Responsible Investment, has expressed concerns about the push towards integrated reporting, saying it may water down ESG (environmental, social and governance) reporting.

While supportive of the fundamental concept of integrated reporting, SIF Chief Executive Lisa Woll said: “We are concerned that integrated reporting may diminish the quality of the good ESG reporting that is done now.” The comments come in a a letter to Professor Mervyn King, the Chairman of the International Integrated Reporting Council (IIRC), as part of a consultation.

“The bottom line is that many US SIF members would actually prefer to see a separate and comprehensive ESG report published than a watered-down, much shorter ESG section of an integrated report,” the letter states. Woll stressed to Responsible Investor that the SIF is supportive of “properly done, comprehensively approached integrated reporting”.
The letter said the council’s push to remove “clutter” may have the unintended consequence of excluding ESG information – “further diluting the quality of the sustainability reporting that exists today”.

The IIRC was launched in August 2010 by the Global Reporting Initiative and Prince Charles’ Accounting for Sustainability Project with the support of some of responsible investing’s best known names, such as APG, the UN Principles for Responsible Investment, Railpen and the International Corporate Governance Network (ICGN).The IIRC promotes the idea that integrated reporting, or < IR >, will help to bring together data to “create a more profound and comprehensive picture of the risks and opportunities a company faces”.

The IIRC’s members include UN PRI Chairman Wolfgang Engshuber, ICGN Chair Christy Wood, Hermes Chairman Sir Mark Moody-Stuart (in his UN Global Compact capacity), Angelien Kemna of APG, Paul Clements-Hunt of the UN Environment Programme Finance Initiative (UNEP FI), Mindy Lubber of Ceres and Huguette Labelle, chair of campaign group Transparency International.
Despite this, Woll urged the IIRC to seek greater participation from sustainable and responsible investors, saying the major accountancy firms have been more actively represented in the consultation process than investors, civil society and other stakeholders.
Another concern was the lack of synergy between integrated reporting and the Global Reporting Initiative.

Last month the IIRC announced that some of the world’s leading companies would participate in a pilot programme.

While acknowledging that many sustainability reports are “heavy on feel-good anecdotes and light on statistics”, Woll argues that integrated reporting must not result in the removal of information that is important to investors. The IIRC consultation ends on December 14.

  • (Amends to re-phrase the first paragraph and make clear that SIF is supportive of the broad concept of integrated reporting whilst raising a number of concerns)