Latest research on ESG integration and disclosure in the FTSE 100
Since the Covid-19 pandemic, ESG has become even more of an important subject for clients and investors as it is both a way to do well and a way to mitigate risk in the long term.
Globally, sustainable funds based on ESG themes pulled in a record-breaking $20.6 bn of new money in 2020 – almost four times the 2019 figure of $5.5 bn, itself a record.
The ESG reporting landscape is complex, ranging from frameworks that include the SASB, the TCFD and the GRI to organizations like Sustainalytics that rate the sustainability of listed companies based on their ESG performance, to name but a few.
There are significant moves to create more harmony between the various standards and frameworks, such as the merger of SASB and the International Integrated Reporting Council, collaboration between GRI and SASB and the proposed creation of an IFRS sustainability standard, which, in many ways, could be a game changer on the investor engagement side.
The simple truth is that not taking ESG reporting seriously is no longer an option. Listed companies must understand how investors analyze ESG and respond to that in their reporting because this will ultimately impact the availability and cost of capital open to them.
In this report, we examine 39 annual reports from FTSE 100 companies. Using the London Stock Exchange’s industry labels, we analyze the most recent reports of the two largest companies in each industry by market cap, covering:
- ESG integration
- ESG materiality
- ESG strategy
- ESG performance
- ESG governance
- Independent standards and frameworks.
The report offers practical advice on integrating ESG into corporate reporting and what best practice looks like today.
If you would be interested in hearing more about the research, how well your company is integrating ESG into its reporting and how Luminous can help you meet your investor needs, please do get in touch.
As a strategic comms partner, Luminous provides investor engagement & ESG disclosure, sustainability & impact and brand & culture expertise that connects insight and creativity to business outcome.
Our work is respected for presenting lucid investment cases, driven by persuasive storytelling and distinctive creativity. We craft and create best-in-class annual reports, investor websites and ESG communications.
Related content from Luminous:
A materiality assessment is the bedrock of a credible sustainability strategy. But past approaches to understanding material issues sometimes left companies and their stakeholders scratching their heads as to whether the information offered in sustainability and ESG reports truly represented the sustainability-related risks and opportunities of the business. But regulators, investors and other stakeholders are paying more attention – and asking for more credible assessments.
The approach of double materiality offers a more holistic option for understanding the full range of information that stakeholders seek. Examining how sustainability matters affect corporate value using both the ‘outside-in’ approach preferred by standards like SASB and the ‘inside-out’ approach promoted by GRI offers a robust framework for companies to follow.
Rachel Madan, director of sustainability & impact and Stephen Butler, director of investor engagement & ESG disclosure at Luminous, discuss what the new standard of double materiality means for companies that are taking their sustainability strategy and reporting seriously. Visit https://insights.luminous.co.uk/why-you-should-rethink-materiality to listen to their conversation.
UK premium listed companies with reporting periods beginning on or after January 1, 2021 are now required by the Financial Conduct Authority to adopt TCFD reporting in their annual report. The requirement will be rolled out more widely from the following year onwards. For those preparing to report against TCFD recommendations for the first time, it is all about being on a journey where more detailed disclosures can be added over time – for instance, with reference to scenario analysis or a company’s supply chain.
Visit https://insights.luminous.co.uk/embarking-on-the-tcfd-journey to listen to our interview with Simon Weaver, co-head of climate risk and decarbonization strategy at KPMG, and download our briefing guide for UK-listed companies starting out on their TCFD reporting journey. With contributions from Berkeley Group, Britvic, Severn Trent, KPMG and the Financial Reporting Council’s Financial Reporting Lab, the guide outlines:
- what level of detail is initially required to comply
- what new information is likely to be required
- what ‘good’ looks like
- summary recommendations
- proposed next steps.
Severn Trent stands out as a company that genuinely walks the walk and doesn’t just talk the talk, with social purpose and sustainability fully embedded in everything it does. In turn, its ESG story is fully integrated across its reporting suite and corporate communications.