Machine readable ESG disclosure is effective ESG disclosure
Major governments worldwide have implemented – or are working to implement – new initiatives mandating sustainability and climate-change related reporting. The aim is to better understand the financial risk faced by climate change, and, in some jurisdictions, to also understand the wider impact entities have on environmental social interests.
The Regulatory Review took a look at how disclosure mandates should be designed to promote better climate-related decision making and risk management, with the understanding that effective disclosure should improve the way companies and policy makers respond to the impacts of climate change.
The article advocates for clear rules aimed at making disclosures understandable, comparable and consistent. This includes standardising disclosures and ensuring that they are machine-readable with accompanying standardised taxonomies. This will allow digital analysis of disclosures, vastly improving how understandable they are and the utility of the resulting information.
We wholeheartedly agree – and are encouraged to see so many regulators and standard setters already following these steps to put in place digital, machine-readable, standardised sustainability reporting requirements.
Read the article here.
