More standardised ESG disclosure to benefit investors

The next big step in environmental, social and governance (ESG) research needs to be the standardisation of data and disclosure, according to a panel of ESG experts.

In an open forum at this week’s Responsible Investment Association Australasia (RIAA) conference, experts agreed that as much standardisation of disclosure as possible from large companies in terms of ESG data would make a huge difference to the provision of information, benefitting investors and research providers.

“Investors need a clearer picture of what we’re asking companies for, this is the challenge for companies, they’re probably getting a lot of different messages” said Pablo Berrutti, manager for responsible investments and sustainability at Perpetual Investments.

“[We need] standardisation of disclosure as much as possible because the risks are different for each company and each sector.”

And beyond the provision of data, the sector would also benefit from a consistency of demand from asset owners, according to Anne-Maree O’Connor, head of responsible investment at the Guardians of New Zealand Superannuation Fund.

Elaine Prior, director, senior analyst, industry thematics and ESG at Citi Investment Research, said she hoped that as the sector developed individual equities managers and analysts within the various funds would start talking to their stockbroking counterparts about ESG and sustainability issues in the stocks that they cover rather than having it be a separate issue that is not directly aligned with the commercial arrangement between fund managers and analysts.

Duncan Paterson, the chief executive of Corporate Analysis, Enhanced Responsibility (CAER) said that if superannuation funds could be persuaded to move some default investment options into socially responsible investment options that would increase the demand for responsible investment products.