27 April 2020
This recent report explores the tension within companies regarding their reporting and disclosure on environmental, social and governance (ESG) issues to build a better understanding of the risk/return profile of transparency and thereby help companies to balance competing interests. Initiatives that rank companies’ performance based on information in the public domain are creating new incentives for leading companies to be transparent about their ESG performance. Pushing against the trend for more transparency are costs of data collection, requirements for assurance, exposure to legal jeopardy and legitimate perceptions of reputational risk. The lines between mandatory and voluntary, compliance and non-compliance, financial and non-financial are all blurring. These changes in the corporate reporting landscape are creating new conflicts within companies as different departments try to reconcile their sometimes very different views of the costs and benefits of transparency.