Strategic Focus: Future Evolution Of ESG Disclosures

Report

Corporate Sustainability Leaders

Sam Renshaw

David Metcalfe

06 Sep, 2021

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Executive Summary

Since 2019, investors have ramped up their efforts to assess a firm’s environmental, social and governance (ESG) performance as part of the investment process. However, financial regulators have concluded that firms’ current disclosures do not meet the quality, frequency and consistency requirements that are necessary to satisfy sustainable finance policy goals. What is the result? There will be a slew of new climate and ESG disclosure laws over the next 12 months. This report provides senior managers in finance, sustainability and legal roles with analysis of how the ESG disclosures landscape will evolve over the next three years. Firms should ramp up their climate and sustainability data gathering and improve their reporting capabilities now – as they face several years of costly transition – to parallel the scope of voluntary and mandatory ESG reporting standards.

Table of contents

Climate Change And Shifting Social Values Frame ESG Policy Decisions
In 2020 The Investment Community Collectively Pivoted To A Pro-ESG Stance

Firms Should Plan For Increased Complexity And Granularity of ESG Disclosure Requirements
New Comprehensive Mandatory Climate And ESG Disclosures Add A Big Compliance Dimension
Voluntary Reporting Will Run In Parallel With Phased-In Mandatory Disclosures Until 2026
Supply Chain Assurance Will Continue To Grow Steadily As A Specific Disclosure Theme
Confidential Climate And ESG Disclosures To Financial Stakeholders Will Boom

Table of figures

Figure 1. ESG Transaction Tracker For Major Financial Market Participants Between 2019 And 2021
Figure 2. Four Categories Of ESG Disclosure
Figure 3. Future Evolution Of Disclosures Between 2021 And 2025
Figure 4. Firm Spending On Supply Chain And Product Sustainability Risk Assessments

Organisations mentioned

European Commission, Acclimatise, Bank of Canada, BlackRock, Blackstone, Bloomberg, Campbell Global, Carbon Delta, Carbon Disclosure Project (CDP), Clarity AI, Competition and Markets Authority (CMA), Corporate Knights, Deutsche Börse, Diginex, EcoVadis, Engine No. 1, Enough Project, Envizi, EU Council, EU Parliament, European Financial Reporting Advisory Group (EFRAG), Exxon, FactSet, Federal Trade Commission, Fidelity, Four Twenty Seven, G7 finance ministers, GHGSat, Global Real Estate Sustainability Benchmark (GRESB), Global Reporting Initiative (GRI), Green Technical Advisory Group, International Financial Reporting Standards (IFRS) Foundation, ISS, J.P. Morgan, JUST Capital, KKR, KPMG, Linklaters, Loan Market Association, Loan Syndications and Trading Association (LSTA), Matter, MioTech, Moody’s, Morningstar, MSCI, NASDAQ, Nasdaq Ventures, OneReport, OpenInvest, Principles for Responsible Investment (PRI), Puro.earth, Red Flag Group, Refinitiv, RobecoSAM, S&P Global, Science-Based Targets initiative (SBTi) , Sol Systems, Sphera, Sustainability Accounting Standards Board (SASB), Sustainable Finance Disclosure Regulation (SFDR), Sustainalytics, SynTao Green Finance, Task Force on Climate-related Financial Disclosure (TCFD), Trucost, Truvalue Labs, U.S. Securities and Exchange Commission (SEC) , United Nations (UN), Vigeo Eiris, Willis Towers Watson

About the Authors

Sam Renshaw

Industry Analyst

Sam is an Industry Analyst in the ESG & Sustainability practice. His current research agenda focuses on ESG solutions across financial markets including ESG information provid...

David Metcalfe

CEO and Co-Founder

David is the CEO and co-founder of Verdantix, where he leads the firm’s strategic direction and client engagement. Since co-founding the firm in 2008, David has built a ...

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