Institutional investors increasingly seeking environmental, social and governance information: Canada’s CAs
TORONTO, September 23, 2010 – A new publication from the Canadian Institute of Chartered Accountants (CICA) finds that mainstream institutional investors are beginning to incorporate environmental, social and governance (ESG) factors into their decision making.
“Institutional investors tend to have a longer investment time horizon and are increasingly showing signs of interest in ESG factors,” said Lisa French, principal, guidance and support, CICA. “These investors are expressing their expectations for corporate disclosures beyond what is currently provided in financial reporting. The CICA Discussion Brief aims to stimulate informed dialogue among interested parties about the demand for and supply of ESG disclosures.”
The publication discusses the findings of interviews with institutional investors and reviews current market and regulatory trends and existing regulatory requirements related to ESG issues. The document also presents options for improving the provision and use of ESG disclosure for investor decision making.
“Currently, governance is the most standardized and available category of ESG information,” noted French. “Due to pressures from regulators and market participants, environmental disclosures, especially those relating to climate change, are becoming more available and standardized. Social information remains the least standardized category.”
The publication states that regulators have a responsibility to ensure that material information needed by capital markets is provided in regulatory filings. Other organizations, such as industry associations, academic institutions, professional bodies and non-governmental groups could assist capital markets by conducting research, developing key performance indicators by industry and working to develop a more integrated framework that would deliver comparable, consistent and reliable information for investors.
The Discussion Brief is titled “Environmental, Social and Governance (ESG) Issues in Institutional Investor Decision Making”. It is published by the CICA’s Canadian Performance Reporting Board and is available online (www.cica.ca/cpr).
The Canadian Institute of Chartered Accountants (CICA), together with the provincial, territorial and Bermuda Institutes/Ordre of Chartered Accountants, represents a membership of approximately 77,000 CAs and 12,000 students in Canada and Bermuda. The CICA conducts research into current business issues and supports the setting of accounting, auditing and assurance standards for business, not-for-profit organizations and government. It issues guidance on control and governance, publishes professional literature, develops continuing education programs and represents the CA profession nationally and internationally. CICA is a founding member of the International Federation of Accountants (IFAC) and the Global Accounting Alliance (GAA).
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