ICSA Guernsey Conference: You don’t need PowerPoint to make a powerful point
By Tamara O’Brien, TMIL’s roving reporter
Members of The Chartered Governance Institute (ICSA) can consider themselves twice blessed. Not only does ICSA hold a conference in the beautiful Channel Island of Guernsey; this year, because the island was covid-free, the October conference actually went ahead in real life.
For TMIL author and corporate-reporter-about-town Claire Bodanis, this in itself was beyond exciting. Ultra-extrovert Claire has chafed under the yoke of coronavirus more than most. Never mind that she herself appeared only as a giant head on a screen: to be invited to speak to real people, gathered in one room, was thrill enough.
So, resplendent in scarlet, virtual Claire took to the virtual stage. And promised her audience of governance and investment professionals that the 20 minutes separating them from post-conference drinks would not pass slowly. It would be filled with insights from her 20 years of writing and producing annual reports – with thoughts on the direction their trade was taking, and why they should get involved in shaping it. All completely hands-free and without aid of PowerPoint, ladies and gentlemen.
She began by taking us through the classic annual-report dilemma for listed companies (“tell your unique and nuanced story in a fascinating way, while covering the topics on this mighty checklist”), and how to resolve it.
It all built up to her main point – that when it comes to corporate reporting, ESG (environmental, social, and governance issues) is the only story in town.
ESG is changing the corporate climate
In evidence, Claire presented some recent developments:
The UK’s Investment Association has called on the Financial Conduct Authority to force companies to report on their climate governance, to ‘enable investors to price climate risk into their investment decisions and, as long-term stewards, to provide support and challenges to companies to transition to more sustainable business models’.
The European Commission is finalising its taxonomy of sustainable activities, thereby creating ‘the world’s first classification system… to boost sustainable investments and reporting’.
A Boston Consulting Group study from September 2020 showed that 51% of American investors – a group not generally held to be cheerleaders for ESG – thought it was ‘important for healthy companies to continue to fully pursue their ESG agenda and priorities as they navigate the crisis, even if it means guiding to lower EPS or delivering below consensus.’
And for anyone still not convinced… back in July, BP announced – alongside its first cut in the dividend since the war, and a record loss – that it was investing billions in renewable energy. Its share price rocketed.
But there are still grey areas in the green
Before we crack open the sparkling hemp juice, there’s a cloud on the horizon. Claire cautioned that moves to create a single, fixed set of global standards for ESG reporting – with the laudable aim of promoting consistency, transparency and comparability – might not be so great for investors.
She expressed concern that the push for such a framework, as driven recently by the World Economic Forum and Big Four auditors, would favour box-ticking over meaningful reporting. ESG issues cannot be quantified as easily or consistently as financials.
Make a stand for the right regulation
All is not lost. Another consortium – comprising the Sustainability Accounting Standards Board; the CDP (originally carbon disclosure project); the CDSB (climate disclosure standards board); the GRI (global reporting initiative); and the International Integrated Reporting Council – is reaching for its collective white hat and riding into town on a ‘comprehensive reporting’ ticket. That is, reporting that brings together non-financial with financial information to create an accurate picture of a company’s real value, and likely value in the long term, for the good of the investment community. And, ultimately, all of us.
So where – bearing in mind there was only a minute left before the bar opened – did that leave our conference audience? Easy, said Claire. All these developments will be out for consultation. As interested parties, don’t pass up the opportunity. Get involved, and make your voices heard for good regulation.
And, of course, do buy the book!
À la perchôine, as we say in Guernsey French!