The journey to building an authentic voice is twofold. First of all, reporting needs to be seen as an opportunity and not an endgame. ESG reporting that is linked to strategic aims is a chance to show investors who the company is and its ethos in a hotly contested space. Those that see it as more than simply a burden or exercise to complete are the ones that will make the most of the opportunities that ESG can bring.
Start by telling a story that begins at the highest level in the business. Everything should hang off a consistent and clear ESG strategy that comes straight from senior decision-makers. From here you can incorporate ESG into your investment ethos, your investment approach and then on to the specific investment objectives of the products.
Make it part of a continuous cycle of setting goals, reporting against them, evaluating and reassessing the original aims to move them forward. Making it a one-off instinctively feels inauthentic.
The second element is bringing reporting in-line with the company's values. If you have a report that looks and feels different to what the business is and how it usually operates it will lack authenticity and be out of touch with the brand.
Substance over style
Beyond being authentic, ESG reporting must put substance firmly over style.
As Mark Carney, the former governor of the Bank of England, recently said: "What gets measured, gets managed", and it is true that only by having clear goals and consistent measurement can there be accurate reporting.
Whether year-on-year or across the fund range, a consistent approach to evaluation makes it easier for clients to understand and interpret the findings.
What is useful here is thinking about and applying reporting styles with the same level of depth and breadth across funds and products. There will be nuances across asset classes and for specific product types, but making it easy for clients to see the ESG performance across different funds in a comparable way is important to helping them ‘read’ the story.
One way to help is to keep reporting simple, clear and concise. Funds should tie ESG reporting and the metrics measured directly to the investment objectives and approach. What did the fund say it would do? Did it do it? How did it do it? Part of this means thinking about the audience reading the report and figuring out what those people need to know.
Lastly, fund managers must make sure outcomes are clearly stated in reporting. It is not just the process but the impact that investors want to understand. Adopting a consistent reporting framework either in-house or externally is critical here.
Defendable data
