Responsible Investment and the Disclosure of ESG Information …
451
the evidence of SRI’s growing impact on the investment market (The Forum for
Sustainable and Responsible Investment 2016).
A trend to combine sustainability and financial reporting is emerging, the Integrated Report (IR). Integrated reporting is a concise communication on how an
organization’s strategy, governance, performance and prospects, in the context of
its external environment, lead to value creation in the short, medium and long term
(International Integrated Reporting Council, IIRC 2013). According to Laptes and
Sofian (2016), the Integrated Report generally covers three fields that show how value
is created, combining financial and non-financial information: sustainable development, social actions and environmental protection.
Socially responsible investors believe that by integrating ESG factors into the
investment process, companies that will perform poorly will be eliminated. Excluded
companies are engaged in unsustainable activities or practices, making them less
profitable over time (Royal Bank of Canada Global Asset Management 2012).
From the ESG information, it is possible to verify how a company and/or sector
treats the sustainability factors and how it reacts to them. In order to analyze this
data effectively, a study is needed that can gather such information and confront
them with safe parameters of sustainability measurement. In such a way that it can
facilitate and make more efficient the decision process of sustainable investors. In
view of this, the present study proposes to verify if the ESG information is properly
reflected in the Integrated Reports or in the Sustainability Reports, in its absence,
of three industry segments and if there is difference in the disclosure among these
selected segments. The reference model of sustainability disclosure elaborated by
Ching et al. (2016) was used to verify which ESG information described in this
model is included in the companies’ reports. This study can help investors and/or
managers of socially responsible funds choose companies that have this information
reflected in the Integrated Report, as well as draw attention to the use of this report.
We contribute to the literature on responsible investment with this study.
2 Literature Review
This section will address responsible and sustainable investments, what are taken
into account in these types of investments, their approaches and the Principles for
Responsible Investment (PRI), then some of the main models of ESG disclosure
are presented and, finally, discussion on the Integrated Report, its objectives and the
framework.
2.1 Sustainable and Responsible Investment
Lydenberg (2013) begins with a sketch of the history of Sustainable Investment
(SI), passes through Socially Responsible Investment SRI and ends with Investing
451
the evidence of SRI’s growing impact on the investment market (The Forum for
Sustainable and Responsible Investment 2016).
A trend to combine sustainability and financial reporting is emerging, the Integrated Report (IR). Integrated reporting is a concise communication on how an
organization’s strategy, governance, performance and prospects, in the context of
its external environment, lead to value creation in the short, medium and long term
(International Integrated Reporting Council, IIRC 2013). According to Laptes and
Sofian (2016), the Integrated Report generally covers three fields that show how value
is created, combining financial and non-financial information: sustainable development, social actions and environmental protection.
Socially responsible investors believe that by integrating ESG factors into the
investment process, companies that will perform poorly will be eliminated. Excluded
companies are engaged in unsustainable activities or practices, making them less
profitable over time (Royal Bank of Canada Global Asset Management 2012).
From the ESG information, it is possible to verify how a company and/or sector
treats the sustainability factors and how it reacts to them. In order to analyze this
data effectively, a study is needed that can gather such information and confront
them with safe parameters of sustainability measurement. In such a way that it can
facilitate and make more efficient the decision process of sustainable investors. In
view of this, the present study proposes to verify if the ESG information is properly
reflected in the Integrated Reports or in the Sustainability Reports, in its absence,
of three industry segments and if there is difference in the disclosure among these
selected segments. The reference model of sustainability disclosure elaborated by
Ching et al. (2016) was used to verify which ESG information described in this
model is included in the companies’ reports. This study can help investors and/or
managers of socially responsible funds choose companies that have this information
reflected in the Integrated Report, as well as draw attention to the use of this report.
We contribute to the literature on responsible investment with this study.
2 Literature Review
This section will address responsible and sustainable investments, what are taken
into account in these types of investments, their approaches and the Principles for
Responsible Investment (PRI), then some of the main models of ESG disclosure
are presented and, finally, discussion on the Integrated Report, its objectives and the
framework.
2.1 Sustainable and Responsible Investment
Lydenberg (2013) begins with a sketch of the history of Sustainable Investment
(SI), passes through Socially Responsible Investment SRI and ends with Investing