Strategic Focus: Future Evolution Of ESG Disclosures

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Executive Summary

Since 2019, investors have ramped up their efforts to assess a firm’s environmental, social and governance (ESG) performance as part of the investment process. However, financial regulators have concluded that firms’ current disclosures do not meet the quality, frequency and consistency requirements that are necessary to satisfy sustainable finance policy goals. What is the result? There will be a slew of new climate and ESG disclosure laws over the next 12 months. This report provides senior managers in finance, sustainability and legal roles with analysis of how the ESG disclosures landscape will evolve over the next three years. Firms should ramp up their climate and sustainability data gathering and improve their reporting capabilities now – as they face several years of costly transition – to parallel the scope of voluntary and mandatory ESG reporting standards. 
 

Table of contents

Climate Change And Shifting Social Values Frame ESG Policy Decisions 
In 2020 The Investment Community Collectively Pivoted To A Pro-ESG Stance  

Firms Should Plan For Increased Complexity And Granularity of ESG Disclosure Requirements 
New Comprehensive Mandatory Climate And ESG Disclosures Add A Big Compliance Dimension  
Voluntary Reporting Will Run In Parallel With Phased-In Mandatory Disclosures Until 2026
Supply Chain Assurance Will Continue To Grow Steadily As A Specific Disclosure Theme 
Confidential Climate And ESG Disclosures To Financial Stakeholders Will Boom

Table of figures

Figure 1. ESG Transaction Tracker For Major Financial Market Participants Between 2019 And 2021 
Figure 2. Four Categories Of ESG Disclosure 
Figure 3. Future Evolution Of Disclosures Between 2021 And 2025 
Figure 4. Firm Spending On Supply Chain And Product Sustainability Risk Assessments 

About the authors

Sam Renshaw

Industry Analyst

Sam is an Industry Analyst in the ESG & Sustainability practice. His current research agenda focuses on ESG solutions across financial markets including ESG information providers and sustainability consulting. Sam joined Verdantix in 2021, and previously worked at Moody’s Analytics as part of the Buy-Side Solutions team. He holds a BSc from The University of Nottingham in Economics and is a CFA Level 2 candidate.

David Metcalfe

CEO

David is the CEO of Verdantix and co-founded the firm in 2008. Based on his 20 years of experience in technology strategy and research roles he provides guidance on digital strategies to C-level executives at technology providers, partners at private equity firms and function heads at large corporations. His current focus is on helping clients understand their market opportunity tied to ESG investment trends and their impact on corporate sustainability strategies. During his 12 years running Verdantix – including 4 leading the New York office – he has helped dozens of clients grow their businesses through fund raising, acquisitions and international growth. David was previously SVP Research at Forrester and Head of Analysis & Forecasting at BT. He holds a PhD from Cambridge University and also worked as a Research Associate at the Harvard Business School.

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