In each of the past three years, EY has surveyed over 200 institutional investors to get their perspective. According to the most recent survey, more than 80% of respondents agreed with four key statements, each of which relate to BlackRock’s points: that CEOs should lay out long-term board-reviewed strategies each year; that companies have not considered environmental and social issues as core to their business for far too long; that generating sustainable returns over time requires a sharper focus on Environmental, Social and Corporate Governance (ESG) factors; and that ESG issues have real and quantifiable impacts over the long term.
EY has long believed these messages to be true, and has worked to advance these themes in many ways, including its membership in the World Business Council for Sustainable Development (WBCSD), a global, CEO-led organization of over 200 leading businesses and partners working together to accelerate the transition to a sustainable world. As the Liaison Delegate to the WBCSD, Brendan leads EY’s work in the integration of ESG into enterprise risk management. Again, gaps exist. A January 2017 WBCSD report found there’s a significant difference between the risks that companies highlight in their sustainability reports, and the risks they disclose in their legal filings or to investors.
However, the increasing number and magnitude of sustainability risks are requiring companies to address the gaps and improve reporting. “Sustainability risks are broad, complex and interrelated,” explains Brendan. “They cover climate change and water scarcity; demographic shifts and resource availability; land use and labor rights. They can affect every part of a business, and should not be viewed as ‘standalone’ risks that can be tackled independently from other risks facing the enterprise. Identifying, quantifying, managing and reporting on sustainability risks also brings its own set of intrinsic challenges, such as overcoming unconscious bias, lack of in-house subject matter expertise and lack of data to support quantification.”