The world of socially responsible investments that track environmental, social, and governance principles is disparate and varied, but the world is working toward a greater standardization to keep the ESG theme in line.
Janine Guillot, head of the Sustainability Accounting Standards Board, argued that reporting standards in ESG investing could converge within 12 to 24 months, Barron’s reports.
In a joint interview with Brian Moynihan, CEO of Bank of America, he backed the work of SASB, which provided a leading framework to report sustainable metrics. While there are competing efforts by the International Business Council of the World Economic Forum, which he leads, and the Big Four Accounting Firms, their intentions should not be misconstrued.
“We do endorse SASB,” Moynihan told Barron’s, adding that efforts were geared to push companies to report on how they were working to achieve the U.N. Sustainable Development Goals, which were established by the U.N. in 2015 to provide a common set of economic, social, and environmental outcomes that member countries are trying achieve by 2030.
Enlisting the Big Four “is part of getting the momentum behind” disclosures, and “getting [companies] over the first hurdle,” Moynihan added. “Part of the magic of having companies driving it with the Big Four is to show its doability.”
Is a Single Global Framework for ESG Really Possible?
Standards around sustainability reporting have coalesced, but companies moan about going through the onerous requirements. Meanwhile, investors are pushing for common standards to better compare companies adequately.
For example, BlackRock has called for a single global reporting framework, arguing that a standardized framework would allow for more accurate pricing and a clearer picture of the drivers of risk and value in a company’s business model.
“The faster we have a global standard, the better society will be and the more change will occur,” BlackRock CEO Larry Fink said at an SASB conference this month.
ESG investments currently cover a wide variety of metrics around sustainability. Consequently, many are looking for common ground that can bring all metrics together under one umbrella.
“Harmonization of data will improve broad market resilience, raise the playing field and long-term durable sustainable business,” John Hoeppner, head of US stewardship and sustainable investments for Legal & General Investment Management, told Barron’s. “We’re very much in support of broad market resilience.”
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