The recent Financial Times article Pension fund giants team up in attack on ‘short-termism’, March 4, addressed the recent letter from three pension funds, Calstrs, GPIF and USS, focusing on long-term value creation calling on companies to provide disclosure around their environmental, social and governance (ESG) risks.
Long-term investors interested in long term sustainability need to be thinking more holistically about a much broader set of risks and opportunities than just those addressed by ESG standards. In 2015, 193 countries agreed on global goals – the Sustainable Development Goals (SDGs) which are universal goals that meet the urgent environmental, political and economic challenges facing our world. Achieving the SDGs will truly lead to long-term sustainability and significant global, inclusive economic growth. The SDGs are forward-looking and address a much broader set of critically important issues than just those included in any set of ESG standards.
The UN’s Global Core Indicators (GCIs) which have been endorsed by the IIRC and WBCSD because they are consistent with financial reporting, provide a full set of SDG indicators established through a multi-year process and agreed by well over 100 countries which are now working with their respective companies to adopt. Used effectively, the GCIs can help provide a road map on how companies can be more sustainable. Asset owners and asset managers would be well served if they call on companies in which they invest to use the GCIs to guide their thinking and reporting around sustainability risks and opportunities.