As the saying goes – what you don’t measure you cannot manage.
Investors globally (individual and institutional) are showing a growing interest to support environmentally responsible companies and building sustainable investment strategies which is in stark contrast to the paucity of corporate reporting on green house gases (GHG) emissions. Measuring Sustainability Disclosure: Ranking the World’s stock exchanges, a study released in Oct. 2014 and sponsored by AVIVA, S&P and ACCA, highlighted that only 37% of the largest 4,969 corporations disclosed GHG emission data in 2013. These figures are dismal considering that the companies trading on these exchanges are at the vanguard of quantitative sustainability reporting. Regulators seem to have conveniently left investors in the dark with respect to information on corporate GHG emissions.
GHG disclosure is one of several sustainability indicators and may not be the a-to-z of sustainability, yet it is the most significant part. The thought is simple – mandatory disclosure requires companies to be transparent about what they emit which places them in a better position to address their environmental impact and helps in speeding up strategies to reduce GHG footprint.
There is broad market awareness around sustainability and it is time regulators stepped in and seek mandatory disclosure of sustainability indicators and the best place to start would be GHG emissions. At the Rio +20 conference in 2012 UK was the first country in the World to announce that it will make it mandatory for all listed companies to disclose emission data in their reports. A 100% of FTSE 100 companies now disclose this data. Defra, (UK Dept. for Environment, Food and Rural Affairs) estimates that such reporting will contribute to saving over 4 Mil Tonnes of CO2e emissions by 2021.
This is a call to action to all finance ministers, stock exchanges and corporate leaders around the world to work with regulators and ensure that the investing community is not denied information that is vital to decarbonize their portfolios and the planet. The $250 Trillion firepower of global capital markets should not be underestimated in its ability to finance new technologies in key areas like energy, transportation, building and industry and expediting implementation of GHG emissions reduction or removal strategies with existing technology.
The time to act is NOW.