Summary: A Harvard Law School paper arguing that companies need to stay focused on the ESG issues that are most important to their businesses and stakeholders. A focus on materiality can help avoid some of the pitfalls that can lead to greenwashing - a focus for regulators. Some enlightening comments on which TCFD disclosures respondents found the hardest to deliver.
Why this is important: Companies should focus their efforts and communication “time” on the things that are “the most important to their businesses and stakeholders”.
The big theme: We think sustainability is a whole lot more than just ESG (either scoring or measurement). To us, it’s about investing in the companies providing the goods and service of the future, and/or engaging actively with the companies that need to adapt if they are to continue to have a future. But we do agree that it’s very important that companies provide meaningful and useful ESG data. The key words here are meaningful and useful.
Summary of a story from Harvard Law School:
The authors believe it is imperative for companies to stay sharply focused on the ESG issues that are most important to their businesses and stakeholders. Large investors have expressed a strong belief that certain ESG factors can have a material impact on a company’s long-term financial health, and there are no signs that investors are backing away from that stance.
Regulators are also cracking down on so-called “greenwashing” – trying to hold companies accountable to ESG commitments. Investors are likely to continue demanding that companies proactively manage their material ESG risks and opportunities appropriately. However, as companies continue to act on ESG, questions remain over what companies should disclose and how.
Let's take a look at why this is important...