There is rapidly increasing demand from the investment community for high quality economic, social and governance (ESG) information. This demand is expected to continue. Within the investor community there are many different types of ESG information users ranging from research and ratings agencies to financial analysts to engagement specialists. But despite this surge of demand, sustainability reporting information provided by companies does not always best meet these investors’ information needs.

In November 2007 GRI launched a new project that will result in guidance on how sustainability reports can best meet the unique needs of investors.

Despite the many surveys of investor sentiment there is very little systematic research about how analysts are using ESG information. The consequences of this gap in information are:

a)     Companies disclose blindly, not knowing how to best meet the analytical needs of investors;

b)     Pension funds face a tremendous difficulty in determining how to assess the quality of their asset managers’ approach since there is no point of reference; and

c)     The pace of innovation of new methodologies is limited by the absence of any information about techniques.

GRI is therefore partnering with RogersCasey to survey the techniques that are being used by investment professionals for integrating ESG information into investment analysis. The survey results will be released in early 2008.

The research on techniques will flow into an Investor Consultation Group. In 2005, the GRI convened a group of analysts from mainstream institutions to develop recommendations for the G3 Guidelines. The group developed a set of recommendations that formed the basis for Strategy & Analysis (1.1 & 1.2) in the G3 Guidelines. One year after the release of the Guidelines, GRI is once again convening a group of investment professionals to assess a group of initial G3 reports as to how well they meet the needs of mainstream financial analysts.

The group will meet twice and their discussions will result in guidance and recommendations that can help companies understand how best to approach reporting to this group. The results of the project will be ready in time for the Amsterdam Global Conference on Sustainability and Transparency in May 2008.

As part of the process, GRI is gathering examples of G3 reports for discussion with a specific focus on those that contain clearly focused Strategy and Analysis. Companies that feel their reports are relevant to a mainstream investor audience are welcome to send a copy to GRI for reference by the group. Reports should be sent to Sean Gilbert at GRI.