Ekaterina Salugina-Sorokovaya, General Director of the International and Comparative Law Research Center, participated in the session “Sustainability Disclosure: Best Practices from an International Investor Perspective” in the course of ECUMENE 2021 Congress. She noted that in a changing world soft law is becoming a regulatory trend. However, despite the positivity of this trend, a set of problems comes to be already evident.
As Ekaterina Salugina-Sorokovaya pointed out: “The information is collected based on disjointed methods and standards, it is presented in a form of a company choosing, and is verified in compliance with third company technology. As a result, investors do not know whether the company provides its ESG indicators correctly and what information should be trusted.”
She added that new disclosure rules are being developed at different levels, but it lacks a framework in which these rules could be written. "The trend existing in Russia and the world regarding the harmonization of various approaches to the assessment of ESG ratings and non-financial reporting standards is quite right. It is necessary to develop global standards,” the expert noted.
“The implementation of mandatory disclosure of non-financial reporting is unjustified,” shared Elena Borisenko, Deputy Chairwoman of the Management Board of Gazprombank, during the session. From her point of view, that requires business awareness. A certain maturity is required so that the business is ready to talk openly with investors, shareholders, and all market participants not only about its successes but also about its problems.
Michael Jantzi, Chief Executive Officer of Sustainalytics, agreed that nowadays investors and issuers want to get high-quality globally agreed standards. However, the speaker brought out attention to the fact that it is not about harmonization or unification, but about the consistency of standards. He also noted that disclosure can occur in different conditions and at different levels, but the fundamental principle underlying the discussed trend is transparency. "I understand that issuers should feel comfortable, but we still have to disclose information about the good, the bad, and the evil. If you want to have a positive reputation among investors, today it is unacceptable to disclose only good information,” stressed Michael Gentzi.
Alice Chapple, Director, Head of Sustainable Finance Division at the University of Cambridge, addressed other important principles of qualitative information disclosure. According to her, companies should not exist in a vacuum of their own data. They should clearly assess their impact on sustainable development in general and disclose materials related to global reference points and sustainable development goals.
"Today the picture is very dynamic because of changing consumers' behavior, their increasing pressure, and, surely, because of changing rules. So investors need to know more than just what is important for the company now. Disclosure should also be about the future. Undoubtedly, information about current emissions is very important. But it is also important that there is accuracy and transparency for investors on what risks there may be in the future. The data at the moment is part of the bigger picture,” summed up Alice Chapple.
Ecumene 2021 is the first international congress on sustainable development and sustainable investment issues, held in Moscow under the auspices of the United Nations. International and Comparative Law Research Center acted as the co-organizer of the event.