Sustainability reporting drive gains Sifa support
The Swedish Investment Fund Association (Fondbolagens Förening) has lent its support to proposals that would pressure companies to better identify their commitment to sustainability.
The response comes to an ongoing consultation aimed at updating the company reporting code in Sweden. Currently many companies follow GRI (Global Reporting Standards), but the Association said that more granular reporting may be required, especially from the perspective of fund providers in a market in which it is estimated that 80% of products follow UN Principles of Responsible Investing.
“A majority of the Association’s members today work in one way or another with sustainable investments. One requirement to make initial judgements on which companies should be de-selected from the portfolio, selected, or whether the fund provider should initiate measures to try to influence the companies owned is that the companies report on their sustainability work,” the Association said.
“The Association therefore sees as positive the proposals for all public companies to be encompassed by demands for sustainability reporting, and therefore the proposals cover pretty much all the companies in which the fund providers may come to invest.”
Figures from the Association suggest that certain fund providers have also taken steps to report on the size of carbon dioxide emissions from their portfolios. However, reporting in this way is complex and raises several challenges.
“To estimated how much carbon dioxide the companies in which the fund has invested release, or estimate the size of holdings in fossil fuels these companies own in turn requires the companies to report such figures. Today the reporting varies considerably depending on the companies’ geographic location and sector. To be able to still produce figures, estimates are made of the carbon emissions from the companies that do not report. The estimates mean that different providers of figures may provide different estimates, which introduce uncertainty to the figures, and complicate comparisons.”
“Reporting according to GRI covers reporting of, among others, greenhouse gases, which means that a sustainability report produced according to this standard makes it possible for the fund provider to in turn produce figures that show the impact on climate. The Association argues that law makers should more clearly take a stand for concrete standards, which like GRI facilitate the fund providers’ analysis of sustainability.”