Institutional Investors Launch ‘ESG Book’ to Standardize Sustainable Data

A group of major financial institutions, investors, and businesses, including HSBC, Deutsche Bank, and Swiss Re, have launched the “ESG Book,” developed by asset manager Arabesque, as a source for corporate sustainability information based on the 10 principles of the UN Global Compact.

The aim of the “ESG Book” is to make environmental, social, and governance (ESG) data more widely available and comparable through a digital platform, and it will follow five principles:

Companies Are Custodians of Their Own Data. Companies should control their sustainability data by having autonomy over the disclosure and maintenance of data in real time. This is intended to improve transparency and market-driven oversight from investors, banks, and business partners, as well as reduce common ESG data errors.
Data Usage Transparency Interactions Bring Better Reporting. Companies should be empowered to report on the most material and valuable issues requested by investors, which would allow data gaps to be identified more clearly.
Accessibility and Impartiality. ESG data should be reported by companies in a clear and consistent manner, and be readily accessible. ESG data platforms should also support equal access for everyone to promote greater transparency and provide more accurate, up-to-date information.
Framework-Neutral. ESG data should provide “a level-playing field” for all market participants and allow stakeholders to collect and report data based on sustainability questions from multiple frameworks simultaneously. It should also be adaptable and flexible to respond to a fast-moving market and regulatory environment.
Easing the Reporting Burden. Reported ESG data can be mapped across a range of frameworks. For example, if a company discloses carbon dioxideemissions according to standards from the Global Reporting Initiative, other reporting questionnaires can be populated with the same data.

The other companies backing the ESG book include the International Finance Corporation, the United Nations Conference on Trade and Development (UNCTAD), the Global Reporting Initiative, Bridgewater Associates, Hong Kong Exchanges and Clearing Limited (HKEX), Allianz, Glass Lewis, Cardano Development, QUICK, Bank Islam, Goldbeck, Werte Stiftung, the World Business Council for Sustainable Development (WBCSD), Climate Leadership Coalition, Climate Governance Initiative, Climate Policy Initiative, Climate Bonds Initiative, Responsible Jewellery Council, and GeSI.

The “ESG Book” “marks the evolution of corporate sustainability,” Georg Kell, chairman of Arabesque, said in a statement. “It enables more comparable and higher quality ESG data, thereby advancing the mission of making markets more sustainable.”

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Despite a large and growing number of institutional investors looking to increase environmental, social, and governance investing, a lack of disclosure, limited accessibility, and inconsistency of ESG data is holding back capital allocation toward sustainable business activities. A recent survey conducted by software and data firm Backstop Solutions Group found that many allocators are not tracking ESG metrics in their private portfolios, despite wanting to do so. And the main reason they cited for this was a lack of a universal standards for measuring and reporting on ESG data.

Last month, the Board of the International Organization of Securities Commissions (IOSCO) published recommendations about sustainability-related practices, policies, procedures, and disclosures in the asset management industry. The IOSCO said the market for ESG ratings and data has grown in recent years, in part due to a lack of consistent information disclosures at the entity level. IOSCO said regulators should pay greater attention to the use of ESG ratings and data products.

“Investors should be able to understand and trust the ESG ratings and data products they use,” Erik Thedéen, chair of the IOSCO’s Sustainable Finance Task Force, said in a statement.

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Tags: Arabesque, Bridgewater, Deutsche Bank, environmental, ESG Book, Governance, HSBC, Net Zero, Principles for Responsible Investing, social, sustainable investing, Swiss Re, UN Global Compact

The Department of Labor (DOL)’s Employee Benefits Security Administration (EBSA) recovered more than $2.4 billion in direct payments for retirement plans, participants, and beneficiaries in fiscal year 2021. The EBSA doled out benefits of $1.548 billion owed to more than 16,000 terminated, vested participants in defined benefit (DB) plans.

Of the $2.4 billion restored, $1.9 billion came from recoveries from enforcement actions, while $499.5 million was from informal complaint resolutions. The Abandoned Plan Program was responsible for another $50.8 million, while the Voluntary Fiduciary Correction Program (VFCP) accounted for the remaining $34 million in recoveries.

“The Employee Benefits Security Administration works diligently to ensure American workers, retirees, and beneficiaries receive the benefits they have earned,” Acting Assistant Secretary for Employee Benefits Security Ali Khawar said in a statement. “The results for fiscal year 2021 underscore our commitment.”

During the fiscal year, the EBSA closed 1,072 civil investigations with 741, or 69%, of them resulting in monetary results for plans or other corrective action. The agency said recoveries on behalf of terminated, vested participants played a significant role in the results. Terminated, vested results represent a combination of the present values of lifetime annuity payments made to participants and beneficiaries, or lump-sum balance payments, plus interest distributions paid as either retroactive lump sums or included in actuarially adjusted future annuity amounts, according to the EBSA.

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The agency’s enforcement program also obtained 449 non-monetary corrections during the fiscal year, including the removal of six fiduciaries, orders barring 34 individuals from acting as fiduciaries, court appointments of 16 independent fiduciaries, and 124 cases that involved reforms of plan procedures, such as improved search procedures for missing participants.

EBSA, which has oversight authority over nearly 734,000 retirement plans, is also responsible for investigating potential criminal conduct, including potential violations of the criminal provisions of the Employee Retirement Income Security Act (ERISA), as well as crimes that concern employee benefit plans, and financial crimes in general.

The agency opened 188 criminal investigations that involved plan officials, corporate officers, and plan service providers, and closed 208 during the fiscal year. It also obtained 38 guilty pleas or convictions and recovered nearly $4 million for the benefit of plans and participants. EBSA also barred 41 people convicted of crimes from serving as plan fiduciaries or service providers in accordance with the provisions of ERISA.

EBSA also provides incentives for fiduciaries and others to correct ERISA violations without becoming the subject of an enforcement action through the VFCP and Delinquent Filer Voluntary Compliance Program (DFVCP). In fiscal year 2021, EBSA received 1,201 applications for the VFCP and reported $34 million of restored payments. The DFVCP, which encourages plan administrators to bring their plans into compliance with ERISA requirements, received 22,553 annual reports during the year.