Bridging the Disclosure Gap: Investor Perspectives on Environmental, Social & Governance (ESG) Disclosures

24 Pages Posted: 27 Jun 2018

Date Written: May 11, 2018


The corporate sector and the investment community are key players towards achieving sustainable development. By measuring and disclosing the economic as well as social and environmental impacts, companies can work towards this goal. Investors, on the other hand, are increasingly looking to integrate ESG metrics into their investment analyses for improved decision making, enabling them to minimize risks and maximize returns over the long-term. Sustainability reporting, as an enabler, is an essential tool that can guide the corporate sector to meet investor expectations on ESG metrics. However, there continues to be a disparity between what is being reported and what investors consider material while making investment decisions. The aim of this research was to throw light on the prominent ESG metrics and reporting frameworks investors are looking at while managing their investment portfolio and the current difficulties that need to be addressed to achieve full ESG integration. The study was based on a macroeconomic perspective looking at how corporations generally report their sustainability practices globally and the metrics investors use in their decision-making strategies. The Global Reporting Initiative (GRI) standards remain the most popular framework for sustainability reporting worldwide and the annual report is held in highest regard for non-financial disclosures by most of the investors. Results show that while the types of ESG metrics sought by investors differs across sectors, Governance, which includes board accountability, executive compensation, human capital management and board diversity seems to be the overriding issue across all industries. Environmental and Social risks are equally critical to financial performance and investors will demand greater disclosure as more data becomes available. Clarity on investor goals matched with a framework of ESG metrics that meet a high standard of methodological rigor would enable systematic analysis of company performance. It is only a matter of time before full ESG integration becomes mainstream, and by bridging the disclosure gap, both the corporate sector and the investment community can work together towards sustainable development.

Keywords: ESG, Sustainability Reporting, Governance, Investor, Disclosure

JEL Classification: F64, G24, G32, G34, Q54, Q56

Suggested Citation

Sridharan, Visvesh, Bridging the Disclosure Gap: Investor Perspectives on Environmental, Social & Governance (ESG) Disclosures (May 11, 2018). Available at SSRN: or

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