What if ESG disclosures become standardized? intro copy
What if ESG disclosures become standardized?
The graphic below details the full set of data metrics and sources used to determine the MSCI ESG Rating of International Paper (NYSE: IP), a US-based producer of paper products. Click on each of the tiles within a given category to view additional details on the raw data underpinning the analysis, as well as the associated scored assessment that feeds directly into the MSCI ESG Rating.
What if we cut down all the forests? footer copy
The graphic is for illustrative purposes only and is not a comprehensive list of data sources. Events Data: News articles and media reports. Macro Risk Data: Water Stress by Country/State/River Basin – Aqueduct, World Resources Institute; GHG Emission Reduction Target by Country – UNFCCC Country Targets; MSCI ESG Research LLC; Chemical Safety Regulations by Country – Stockholm Convention on Persistent Organic Pollutants Ratification; UNECE Globally Harmonized System of Classification and Labelling of Chemicals (GHS); Google Chemical Search Trends. Product Risk Data: Water Intensity by business activity: IERS’ Comprehensive Environmental Data Archive (CEDA); Water withdrawals per sales USD compiled by MSCI ESG Research; GHG Emissions by business activity: IERS’ Comprehensive Environmental Data Archive (CEDA); Eurostat – Air Emissions Accounts by Activity; GHG emissions intensities compiled by MSCI ESG Research Hazardous substances by business activity: Danish Working Environment Authority; International Chemical Secretariat (ChemSec) Substitute It Now (SIN) List. Governance Data: SEC Form 8-K (annual meeting voting results), SEC Form DEF 14A. Regulatory Agency Data: GHG Facility Emissions Data, US EPA Greenhouse Gas Reporting Program (GHGRP). Company Disclosures: 2018 Global Citizenship Report. Geographic and Business Segment Information: 2018 Annual Report.
Done right, standardized ESG disclosures can benefit corporates, investors, and improve the information that flows into ESG analysis. However, disclosure standards do not translate directly to comparability of performance. For the average company, self-reported ESG information comprises approximately 50% of the full suite of information needed to evaluate ESG performance, according to MSCI’s ESG Ratings methodology. Investors need independent sources of information beyond corporate disclosure to paint a more accurate picture of ESG risk and performance.