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PAIB report considers growing investor demand for nonfinancial information

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Feb 10, 2012

The Professional Accountants in Business Committee (PAIB) of the International Federation of Accountants (IFAC) has released a report that considers trends in investor demand for, and use of, environmental, social, and governance (ESG) information.

The report notes that ESG information is increasingly used by investors to understand an organization's key ESG factors and how they impact overall performance over a longer-time horizon. The reporting includes an appendix that outlines the core sector-neutral ESG metrics demanded by investors and reconciles them to the Global Reporting Initiative (GRI) guidelines — these include such items as greenhouse gas emissions, water and energy use, workplace health and safety, and board effectiveness.

The report also recommends how professional accountants can better support their organizations in responding to investor demands for ESG information and ultimately improve the management and reporting of ESG performance. The recommendations include:

  • Professional accountants should work with their organizations to implement a structured and systematic approach to engaging investors to determine their ESG information needs.
  • ESG factors and performance information should be incorporated into governance and accountability arrangements to improve information and disclosure quality.
  • Financial and nonfinancial performance and outcomes should be linked to improve understanding of sustainable value creation.
  • Investor needs should be met by material, timely, consistent, and comparable information.
  • Data that may be dispersed in different parts of the organization or its supply chain should be brought together to support internal and external decision making.

Click for access to the report (link to the IFAC's Web site).

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