(18 February 2022 – Global) In environmental, social and governance (ESG) reporting, the “S” of social reporting is associated with multiple challenges including definition, measurement and most importantly staffing as social impact continues to lags environmental “E” and governance “G” ESG disclosure activity and investment.
Technical staff ability, reporting and capability continue to lag environmental and governance impact investing. A key reason social reporting lags environmental reporting relates to the challenge of measurement according to AsianInvestor’s Hugo Cox. Social factors lacked certifications and standards comparable those available for environmental performance, such as BREEAM, an initiative of the UK’s Building Research Establishment, which provides third party certification of the assessment of a building’s environmental, social and economic sustainability performance.
Banks have a long way to improve on the ESG front and CEO renumeration lacks definitive incentives, especially for social reporting.
The collection of information was in its infancy. In the absence of binding targets around social engagement from government or across the investment industry, individual investors had a responsibility to improve disclosure in this area.
“Qualified targets will need to be agreed – and the data collection process viable – to make social programs have a material impact and drive value. But we believe this topic is too important to sit and wait for industry targets to be agreed, we will start now and adapt what we do over time” commented Allianz Real Estate Head of ESG and CRO Dr Raphael Mertens.
“In the context of more social impacts, such tools do not currently exist to the same extent. It is much harder to measure the impact that buildings have on the communities they serve, and quoting a human rights charter is not enough” Mertens added