Stakeholders’ interest growing in non-financial performance of businesses: Report

By: |
August 24, 2021 5:08 PM

The range of ESG issues that investors look at continue to grow, encompassing diverse aspects such as carbon emissions, human rights record and board diversity.

The COVID-19 pandemic has helped with widespread awareness on actions pertaining to ESG issues.

Stakeholders’ interest is growing in non-financial performance of businesses and there is a deep realization that sustainability issues have a clear correlation with business outcomes and the ability of companies to create long-term value, as per a report.
The report noted that investors continue to be among the key stakeholder groups driving momentum around environmental, social and governance (ESG) actions and disclosures.

The range of ESG issues that investors look at continue to grow, encompassing diverse aspects such as carbon emissions, human rights record and board diversity. The report–The Evolving Non-Financial Reporting Landscape– by consultancy firm EY highlighted the importance of ESG related disclosures.

It focused on the trends in the current ESG reporting landscape, the drivers for change, Indian scenario of increased disclosure requirements and future design of ESG reporting, among others. The COVID-19 pandemic has helped with widespread awareness on actions pertaining to ESG issues. A strong sustainability implementation is the only way forward into the new normal. The sharp focus on ESG is a consequence of the need for building better business ecosystems and bringing greater resilience for the future, it said.

Besides, it found that while financial reporting has evolved on account of internationally recognized accounting standards around the world over a longer period of time, sustainability disclosure is more complex due to several reasons. “There exists no formal boundary for sustainability topics. It varies across geographies, markets, industries and sectors with newer issues and frameworks being added continuously.

“This complexity of addressing several issues under varied frameworks highlights the need for an effective, integrated and concise non-financial disclosure,” Shailesh Tyagi, partner, Climate Change and Sustainability Services, EY India said. It highlighted an important initiative launched at the World Economic Forum’s fourth annual Sustainable Development Impact Summit in September 2020, where a set of universal ESG metrics and disclosures were released to measure stakeholder capitalism that companies can report on regardless of their industry or region

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