How capital markets can take sustainability to the next level

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Watch the third episode of Leadership in Extraordinary Times season 3 above or listen to the podcast below.

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As countries and organisations commit to reaching carbon net zero by 2050, investors are increasingly calling for more sustainability information—not just on carbon emissions, but on biodiversity, natural capital, social inclusion, and more. This data will help them to understand the viability of business models, the corporate license to operate—and therefore the capacity to create value.

The third Leadership in Extraordinary Times broadcast in 2021 explored the issues around sustainability reporting and, particularly, the need for a set of global sustainability standards. Clara Barby, Chief Executive of the Impact Management Project, hosted a discussion between Richard Barker, Professor of Accounting, Saïd Business School, Tajinder Singh, Deputy Secretary General of IOSCO, Dame Elizabeth Corley, Chair of the Impact Investing Institute, and Sandra Boss, Senior Managing Director and Global Head of Investment Stewardship for BlackRock.

Current sustainability reporting is done on a voluntary and somewhat fragmented basis, and cannot be effectively absorbed into the balance sheet or accounts. The panellists argued for a global set of sustainability reporting standards that would sit alongside the traditional financial reports, agreeing that:

Sustainability is about more than carbon emissions Social, environmental, and economic issues cannot be separated into ‘buckets’; the boundaries between them are porous. What might be an economic problem today becomes a social or environmental problem tomorrow, and vice versa.

Standards must be consistent for all sizes and types of organisations A consistent language and consistent frameworks are important, ‘because the one thing you don't want if you're an entrepreneur and you're starting up is to suddenly find halfway through the evolution of your company you've got to completely relearn the way in which you engage with capital markets,’ said Dame Elizabeth.  

But don’t wait until we have the perfect set of standards The standard-setting bodies should not let the perfect be the enemy of the good; and companies should not wait until standards are globally agreed: they should report as fully as they can now, and show how they will be fitting into the net zero journey.