Voluntary Mechanisms to Mandatory Action

By Raminder Chowdhary

The saying goes – what you don’t measure you cannot manage.

Investors globally (individual and institutional) are showing a growing interest in supporting environmentally responsible companies and building sustainable investment strategies, which is in stark contrast to the paucity of corporate reporting on green house gases (GHG) emissions.

Measuring Sustainability Disclosures: Ranking the World's stock exchanges, a study released in October 2014 and sponsored by AVIVA, S&P and ACCA, highlighted that only 37 percent of the largest 4,969 corporations disclosed GHG emission data in 2013. These figures are dismal considering that the companies trading on these exchanges are at the vanguard of quantitative sustainability reporting.

Regulators seem to have conveniently left investors in the dark with respect to information on corporate GHG emissions. Disclosure is one of several sustainability indicators and may not be the A-to-Z of sustainability, yet it is the most significant part. The thought is simple – mandatory disclosure requires companies to be transparent about what they emit, which places them in a better position to address their environmental impact and helps in speeding up strategies to reduce GHG footprint.

There is broad market awareness around sustainability, and it is time regulators stepped in and seek mandatory disclosure of sustainability indicators and the best place to start would be GHG emissions.  At the Rio +20 conference in 2012, the U.K. was the first country in the world to make it mandatory for all listed companies to disclose emissions data in their reports.  All of FTSE 100 companies now disclose this data. DEFRA, (the U.K. Deptartment for Environment, Food and Rural Affairs) estimates that such reporting will contribute to saving over 4 million tons of CO2 equivalent emissions by 2021.

This is a call-to-action for all finance ministers, stock exchanges and corporate leaders around the world to work with regulators and ensure that the investing community is not denied information that is vital to decarbonize their portfolios and the planet. The $250 trillion firepower of global capital markets should not be underestimated in its ability to finance new technologies in key areas like energy, transportation, building and industry  and expediting implementation of  GHG emissions reduction or removal strategies with existing technology.

The time to act is NOW.

Image credit: Flickr/Salim Virji

Raminder Chowdhary: He earned two Master's Degrees in Economics and Business Admn. and worked for MNC's around the World as a supply chain specialist. He is the founding member of One Earth Foundation - an NGO focusing on conservation of natural eco-systems, preservation of ancient wisdom and environmental education.  He is based in India and is a regular speaker on various regional and national forums promoting the need for higher levels of corporate social and environmental participation and responsibility. In 2014 he was awarded the Metro AG Community Silver Star (India) for his efforts. Raminder has initiated and successfully implemented numerous projects in the sectors of TK & TCE preservation, special needs groups, livelihood challenges for indigenous communities, water, large scale forest and lakes clean up campaigns, engaging students in ecological initiatives, etc