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New research on the value of 'extra-financial' disclosure to investors and analysts

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Aug 06, 2012

A new research report has been issued exploring how investors and analysts source, use, and are influenced by so-called "extra-financial information," which includes environmental, social, and governance (ESG) information and other nonfinancial information. The report shows that for the majority of investors and analysts surveyed, extra-financial information is very relevant or relevant to investment decision-making or analysis.

The report, The value of extra-financial disclosure — What investors and analysts said, is the result of a survey commissioned by the Global Reporting Initiative (GRI) and The Prince’s Accounting for Sustainability Project (A4S), and conducted by Radley Yeldar. The survey involved a relatively small sample of investors and analysts but is considered "a useful snapshot of investor and analyst sentiment towards extra-financial disclosure at the present time."

Some of the survey findings include:

  • Over 80 percent of the research sample believes that extra-financial information is very relevant or relevant to their investment decision-making or analysis.
  • Investors and analysts use multiple sources to gather relevant financial and extra-financial information but show a strong preference for sources that are more comprehensive and specialized — with direct engagement with board-level representatives, followed by formal reporting channels such as the sustainability report, annual report, or integrated report are most influential.
  • Over 80 percent of investors and analysts surveyed believes that integrated reporting will deliver benefits to their analysis and company assessments — seeing integrated reporting as useful or very useful for increasing the reliability, accessibility, relevance, and comparability of extra-financial information as well as improving assessments of future company performance.
  • A majority of respondents were not familiar with eXtensible Business Reporting Language (XBRL), with less than 10 percent of those surveyed indicating they use XBRL and that it affects how they receive financial information.

Click for more information (link to the GRI's Web site).

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