With respect to the current state of ESG disclosure globally, issuer reporting frameworks for ESG information are fragmented.
Fragmentation of Frameworks: There are numerous ESG reporting frameworks globally, including the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), and others. These frameworks have different scopes, metrics, and guidelines.
Lack of Standardization: The lack of a unified global standard leads to inconsistencies in ESG reporting, making it challenging for investors to compare ESG performance across companies and regions.
Efforts Toward Harmonization: While there are ongoing efforts to harmonize ESG reporting standards, such as initiatives by the International Financial Reporting Standards (IFRS) Foundation, the current state remains fragmented.
CFA ESG Investing References:
The CFA Institute’s reports on ESG disclosure highlight the fragmented nature of current reporting frameworks and the challenges this poses for investors seeking consistent and comparable ESG information. The institute advocates for greater standardization to improve the quality and utility of ESG disclosures.
======
