Over 740 investors, who collectively manage more than $136trn in assets, are pressing 150,000 companies for more information regarding their environmental policies and impact.
An annual letter from the 746 investors engaged with disclosure platform CDP was sent to the boards of these companies. Typical disclosures include data on climate, deforestation, water, and biodiversity – but this year’s letter also requested disclosure regarding company plastics and their plans to reduce output.
Signatories of the letter include asset managers, insurers, and banks, and represent over 40 countries. Despite extensive media coverage of the alleged “war on ESG investment” in the US, CDP reports a 10% yearly increase in the number of investors asking corporations for disclosures.
CDP’s founder and chair Paul Dickinson said: “Despite suggestions that investors are deprioritizing ESG considerations, this year’s Letter to the Board shows the complete opposite. Capital markets understand the necessity for comprehensive corporate environmental data in informing investment and lending decisions across markets.
“This, coupled with a record 18,700 disclosures last year – a 38% increase, demonstrates corporate ambition on meeting the mid-century goals of the Paris Agreement.”
Improved transparency and strong ESG credentials are proving to be a vital asset of business – both helping to increase investor confidence as well as help organisations prepare for policy change and regulation. This letter from investors emphasises the shift that companies need to start making.
Dickinson said: “Disclosure is already mandatory or soon to become so in most major economies including the UK, EU, Brazil, Japan, and the US. Companies still lagging behind are simply out of touch with market reality and are overestimating their own resilience. They must act now to get ahead of governments and market regulations, and to future-proof their operations.”
Later this week, CDP plans to publish a significant report analysing company disclosures made on its platform over the last 12 months.