Plenary Panel Discussion: Materiality and Corporate Financial Disclosure

Afternoon Plenary Panel Discussion: Materiality and Corporate Financial Disclosure

Rapporteur: Rachelle Graham

The plenary panel discussion was opened with a summary of a paper that examined the wide range of disclosure practices surrounding materiality and ESG issues. The paper concluded that, in many cases, there is a lack of alignment between companies’ sustainability and financial reports such that there are different criteria for the inclusion of issues in one versus the other. The panelists discussed the need to forge a link between the two reports where ESG metrics are integrated into the company’s core strategy and measured with financial metrics.

There are many challenges, however, to this integration. The panelists brought up a range of challenges including differing time scales, scope, variety of stakeholders, rate of change, data accuracy, and audience. One panelist also brought up an interesting distinction between data, information and decision useful information. So while the level of reporting has matured to a certain degree, we still have to wade through data to find relevant and decision useful information.

At the end of the panel discussion, the panelists were asked to identify one closing recommendation for the audience members. Some panelists touched on materiality and recommended that we should measure fewer things more deeply based on the relevant application of that information. Other panelists suggested that we should use resources and methodological standards that are already at our disposal. And finally, some panelists advised that companies should have an external reporting strategy framed in a language that a mainstream investor can understand.