TechTalk Blog - How to Talk to Investors on Non-Financial Reporting Disclosures to Attract New Capital

By David Colgren posted 03-18-2019 10:38 AM

  

According to CERES - while almost half of the 600 largest U.S. public companies communicate with investors about environmental, social and governance issues, they could be doing a much better job of it. One “constant refrain” heard from investors is that “if a company is not talking about its sustainability strategy and performance, they may conclude the company does not have a story to tell or, even worse, it’s hiding something.”

Ceres offers a set of nine recommendations “to guide companies toward more meaningful and effective investor engagement on ESG issues.” What is the key message?  Don’t “fall into the trap of positioning sustainability as the ‘right thing to do,’ without making the connection to the business case.”

A recent memo from PwC warns its clients on the “safe zone” of ESG reports and communications is quickly disappearing as investors get more aligned in the type of info they’re looking for – and continue to integrate ESG criteria into decision-making by investment officers & PMs, rather than just the stewardship team.

The Increasing role of the Management Accountant

This is where the management accountant can come into the picture. Management accountants can help the organization from an accounting and performance perspective help investors to better understand the connection to the company’s business case. Doing so can be very profitable to the company in attracting ESG investments.

According to Ceres, a quarter of dollars invested in the U.S. is now ESG investment, raising the stakes on accountable sustainability reporting to investors. 

Likewise, companies have increased their commitments to ESG:  Ceres research shows that among that 600 largest public companies, “nearly two-thirds have commitments to reduce greenhouse gas (gHg) emissions, half are actively managing water resources and nearly half are now actively protecting the human rights of their employees by disclosing human capital data in its financial statement reports as well.

Smaller companies and organizations – including government enterprises are all moving toward effective sustainability reporting to the capital markets.

Importance of Diversity and Inclusion

Having an active diversity and inclusion strategy and disclosing these metrics included in the financial report also builds the business case to attract an increasing number of investors looking for this additional data disclosure. The US House of Representatives’ Financial Services Committee just created a Diversity and Inclusion subcommittee (the first in the nation’s history) to examine this important human capital topic and to understand what companies are disclosing this data, why and how the capital markets and government can support better disclosure. The financial services committee has Congressional oversight of the US SEC, PCAOB and the accounting and auditing profession,

How Can Diversity and Inclusion Support a Company’s Business Case?

A 2007 study found that Fortune 500 companies in the top quartile for female board representation outperform those in the lowest quartile by at least 53 per cent return on equity. - from “The Bottom Line: Corporate Performance and Women’s Representation on Boards” by Catalyst

For the management accountant marketplace efforts are underway to support diversity and inclusion. According to a recent CFO Magazine story - for example, management accountants - the gender pay gap Is rapidly closing.

Increasing Importance of Non-financial reporting -- including Sustainability and Human Capital Data in the Capital Markets

Non-financial reporting is becoming increasing common in corporate disclosures included in the financial statement around the world. Currently this disclosure has NOT been mandated by the US SEC and CFOs and finance teams are looking for guidance from the US government on disclosing this important data to support a growing investor interest marketplace.

Many finance teams in the US are looking to other countries where securities regulators have mandated non-financial disclosure for direction such as in the EU, Japan and other Asian countries. Meanwhile, proactive companies are disclosing this information and linking it to their business case with metrics to measure. IOSCO – which the US SEC is a member issued guidance to the capital markets on disclosure related to this topic.

Management accountants are and will play an increasing important role in this effort. New technologies are being created to help management teams include this data into their financial reporting process. Join the IMA's Technology Solutions Practice Committee to learn more about these new technologies being used by management accountants to support non-financial reporting to an increasingly interested capital markets.  

 

#News
#businessculture
#Accountability
#accountant
#Accounting
#accountingsoftware
#AccountingTechnology
#ACORD
#advancedanalytics
#AFLCIO
#Amazon
#AmericanBarAssociation
#analysis
#Apple
#Assurance
#Audit
#Auditors
#Automation
#BalancedScoreCard
#banking
#BANKS
#barcode
#BDO
#benchmarking
#BI
#BigData
#BigFour
#Bitcoin
#Blackrock
#Bloomberg
#BradMonterio
#BrocRomanek
#businessinteligence
#Csuite
#Calpers
#Calsters
#CapitalMarkets
#CarolynMaloney
#CCH
#CDO
#CEO
#CFA
#CFAInstitute
#cfo
#CFOMagazine
#ChamberofCommerce
#ChiefDataOfficer
#ChiefInformationOfficer
#ClimateChange
#ClimateFinance
#cloudcomputing
#Cloudfunding
#compliancereporting
#Comptroller
#COMPTROLLERS
#CongresswomanMaxineWaters
#CongresswomenCarolynMaloney
#ConsumerFederation
#ContinuousReporting
#corporatedisclosure
#Corporategovernance
#corporatereporting
#corproatedisclosure
#COSO
#CostAccounting
#CSR
#cyberrisk
#Cyber
#CyberAttack
#Cybercrime
#cybersecurity
#DATAAct
#data
#DataAmplified
#dataanalytics
#datadriven
#datagovernance
#datagovernancecloudIMA
#dataquality
#datascientist
#datasteward
#datavisualization
#dcolgren
#DepartmentofLabor
#DepartmentofCommerce
#Deloitte
#DigitalMedia
#disclosure
#DistributedLedger
#documentation
#DowJones
#EDGARSystem
#ElizabethWarren
#emergingtechs
#EnhancedReporting
#ENRON
#EPA
#EquityResearch
#ERM
#ErnstYoung
#ERP
#ESG
#ESMA
#Excel
#ExecutiveCompensation
#ExecutivePay
#EY
#FASB
#FBI
#FCW
#FederalReserve
#FEI
#financialinformation
#financialmodeling
#financialreporting
#FinancialServicesCommittee
#FinancialStabilityBoard
#FinancialStatements
#financialtechnology
#FinancialTimes
#Fintech
#FSCDems
#Fujitsu
#GAAP
#GAO
#gartner
#GASB
#GeneralLedger
#GE
#GlassLewis
#GLEIF
#globalstandard
#Google
#governance
#GovernmentReporting
#GrantThornton
#HouseFinanceServicesCommittee
#IASB
#IBM
#IFAC
#IIA
#IIRC
#IMA
#informationtechnology
#integratedreporting
#InternalControl
#InternetofThings
#IOSCO
#IoT
#ITaudit
#iXBRL
#KPMG
#LEI
#LivWatson
#machinereadable
#managementaccountant
#MaterialRisks
#MaxineWaters
#metrics
#MickMulvaney
#MobileComputing
#MSNBC
#NACD
#NASDAQ
#NewYorkTimes
#nonfinancial
#NonFinancialReporting
#NonProfit
#NYSE
#OFR
#OpenData
#OMB
#opengovernment
#OpenGov
#ORACLE
#oversight
#payroll
#performance
#predictive
#predictiveanalytics
#privatecloud
#processimprovement
#projectmanagement
#PubicCompanies
#PublicCompany
#PWC
#Regtech
#RegulatoryReporting
#reporting
#Research
#risk
#riskmanagement
#Roboaccounting
#robotics
#Rutgers
#SAP
#SayonPay
#SecuritiesExchangeCommission
#SenateBanking
#SenatorBobMenendez
#SenatorChuckSchumer
#SenatorMarkWarner
#SenatorWarren
#smartmachines
#socialmedia
#software
#StakeholderEngagement
#StrategicFinance
#structureddata
#supplychain
#SustainabilityReporting
#taxonomy
#tech
#techpractices
#TechnologySolutions
#TechTalk
#ThomsonReuters
#Tiaa
#Transparency
#Treasurer
#TRUMP
#UNITEDAUTOWORKERS
#UnitedNations
#UnitedStatesSenateBankingCommittee
#unstructureddata
#USChamber
#USGAO
#USHouse
#USSecuritiesExchangeCommission
#USSenate
#USTREASURYOFR
#USDOJ
#WallStreet
#WallStreetJournal
#WhiteHouse
#WiredMagazine
#WSJ
#XBRL
#XML

0 comments
12 views

Permalink