4. Transparency And Disclosure
tainability risks and in view of achieving their own sustainability goals. Given different levels of quality in such disclosures, however, action must be taken with respect to transparent, comparable and reliable sustainability reporting as well as with respect to the ramifications of companies’ own business activities on social and ecological topics. Besides issues of availability and comparability, the materiality of the information is particularly important, because the sustainability data published do not necessarily accord with the information needs of various stakeholder groups. Not only financial market players, but also consumers, civil society representatives and the scientific community need more meaningful information on companies. This improves insights not only into the performance, operating results and current and future financial condition of a given company (the classic financial accounting view), but also and increasingly into the social and ecological effects of economic activities (expanded sustainable and therefore holistic view).
Adequate transparency and disclosure requirements serve to provide better data and information for the decisions of financial industry and real economy players and, ultimately, to ensure investments and funding contribute to sustainability goals22. Good data are crucial to the following:
1. assessments of investments and funding at the level of companies, individual engagements and portfolios as to the extent to which they incorporate considerations of sustainability risks (and sustainability opportunities) as well as contribute to long-term sustainability goals, e.g. through coherence with sectoral development approaches and their compatibility with the Paris climate goals,
2. risk assessments along established risk types including special consideration of sustainability risks, among them climate-related risks23.
A multitude of activities have taken place in this respect in recent years. There is for instance the International Integrated Reporting Council’s (IIRC) framework for integrated reporting24 and the EU Directive on “disclosure of non-financial and diversity information by certain large undertakings and groups” 25. A special emphasised should be placed on the recommendations of the Task Force on Climate-
Many large corporations in the real economy and/or the financial industry have already integrated sustainability reporting and sustainability data disclosures into their practices. Numerous companies collect high-quality sustainability indicators and disclose how they incorporate them while managing sus-
The Sustainable Development Goals and the requirements of the Paris Agreement on Climate Change are reference points. 22
23
See the representations in the BaFin Circular on the Management of Sustainability Risks, https://www.bafin.de/ SharedDocs/Downloads/DE/Merkblatt/dl_mb_umgang_mit_nachhaltigkeitsrisiken.pdf?__blob=publicationFile&v=2. 24
https://integratedreporting.org/wp-content/uploads/2013/12/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf. 25
EU Directive 2014/95/EU, commonly known as the EU “Non-Financial Reporting” Directive (NFRD); transposed into German law through the German CSR Directive Implementation Act (CSR-RUG).
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