|Dear Fellow Supporters of Integrated Reporting,
This e-mail concerns increasing ESG quantification in investing, my recent post on Forbes.com analyzing GE’s first integrated report, a recent piece on clean energy by Georg Kell in Huffington Post, and a report on materiality by the Corporate Reporting Dialogue.
“Investing With a Conscience, but Done by A Robot,” by David Gelles of The New York Times discusses the fact that “a growing number of investors that are leaning on mountains of new data about companies’ environmental, social and governance performances in hopes of making more profitable trades.” He mentions a number of firms including Arabesque (the first ESG Quant fund), BlackRock, BNY Mellon, Goldman Sachs, and Newton. There is also a nice quote from Andreas Feiner, Head of ESG Research at Arabesque, that “We have the opportunity to marry making money with a purpose. That is a very rare thing in finance.”
GE’s First Integrated Report
In my previous e-mail I informed you that GE has issued its first integrated report. I received a number of e-mails asking me what I thought of it. Given the obvious importance of this step for the integrated reporting movement, I decided to write up my analysis and it has been posted as “Why GE’s Integrated Report Makes A Powerful Statement.” Their report is an excellent example in many ways.
Here’s what I say in my final paragraph:
I have heard endless reasons from U.S. companies about why they can’t or shouldn’t produce an integrated report. “Too hard,” “too costly,” “increased litigation risk” and “lack of interest from investors” are just a few of the more common ones. But GE’s integrated report puts all of these objections to rest. It is time for the rest of America, and the rest of the world, to follow GE’s example. The company has a history of being a leader and it is leading again. It’s time for others to follow.
In his most recent piece in Huffington Post “Why it is time to rebuild the energy system” Georg Kell, Vice Chairman of Arabesque Partners and Founding Executive Director of the UN Global Compact, discusses the need to make dramatic increases in funding for clean energy infrastructure in order to limit average global warming to 2°C. This will require an investment of at least $100 trillion between now and 2050. The technology is already there. It is a question of political will. As Georg concludes:
Let us understand that a clean energy future is available now, and is accessible to us today. Let us be emboldened that what is required is not beyond our reach. But above all, let us take action now.
“Statement of Common Principles of Materiality of the Corporate Reporting Dialogue” is an analysis of the treatment of materiality, a fundamental but elusive concept in corporate reporting, by the eight member organizations of the Corporate Reporting Dialogue (CDP, Climate Disclosure Standards Board, Financial Accounting Standards Board, Global Reporting Initiative, International Accounting Standards Board, International Integrated Reporting Council, International Organization for Standardization, and Sustainability Accounting Standards Board). The analysis is organized in terms of Definition/Principles, Scope/Boundaries, and Comments/Discussion. The introduction notes:
These principles are not a lowest common denominator of the respective participants’ approaches to materiality; to the contrary, they represent common foundational principles that the Corporate Reporting Dialogue believes to be generally applicable to all forms of standards development and business reporting to stakeholders.
Robert G. Eccles | Professor of Management Practice | Harvard Business School
Movement: Meaning, Momentum, Motives, and Materiality