Our Position
Meaningful, accurate, timely and comprehensive disclosures of material ESG factors by listed companies are essential for financial professionals as part of their analytical and investment decision-making process. Regulators and exchanges should aim to develop ESG disclosure regimes that result in high quality, consistent and comparable disclosures in their markets.
Main Points
OBSERVATIONS:
- Volume of ESG disclosures in APAC increases, but quality lags
- Solid ESG disclosure practices usually take time to develop, but fast progress is possible
- Disclosure regimes differ widely, in level of obligation, specificity and coverage
- Reporting obligations follow “race to the top” pattern of tightening, from voluntary, to “comply-or-explain”, to mandatory.
- Reporting obligations of large companies tend to be stricter and broader than those of smaller ones
- Governance issues used to dominate, now environmental issues are coming to the forefront
- Global frameworks are used by some regulators, but the number of different ones adds confusion
RECOMMENDATIONS:
For governments, regulators, and stock exchanges
- Ensure meaningful, accurate, timely, and comprehensive disclosures
- Work toward harmonisation of global frameworks
- Articulate benefits of ESG disclosures to issuers
- Offer guidance and training
For issuers
- Educate the board and senior executives on relationship of ESG to strategy and risk management and on the importance of ESG reporting
- Ensure disclosures of relevant and material ESG information
For asset owners and investment managers
- Demand high quality ESG information from issuers
- Articulate the effect of material ESG information on company valuation