"In the end, financial incentives remain crucial in combating climate change," he said. "For this reason, I strongly believe that the most promising strand of sustainability reporting comprises those standards that focus on the investor and on the impact of sustainability issues on the future returns of the company. This is the type of sustainability reporting which will fit well with our Management Commentary Practice Statement, rather than the reporting that focuses primarily on a company’s contribution to the public good. While some investors may be swayed to invest in companies that show good corporate responsibility scores, ultimately the impact of sustainability issues on future financial returns will have a much bigger impact on investment decisions."

This is a similar outlook to that promoted by the U.S.-based Sustainability Accounting Standards Board (SASB). In a talk at the NYSSCPA, outlined in the most recent issue of the Trusted Professional (page 15), the SASB's deputy director of research said its standards were developed specifically with investors—and only investors—in mind, in contrast to the more wide-ranging stakeholder populations considered by other organizations. For instance, while the SASB initially thought to include water waste efficiency in its standards relating to the biopharmaceutical industry, it discovered that investors didn't consider this important, and so removed it. 

With this in mind, while Hoorgervorst is not against sustainability reporting, he said that for it to have meaningful impacts, it must be paired with effective public policy. 

"Sustainability reporting requirements cannot get politicians off the hook in terms of the need for credible climate-change policies," he said. "It is good that the G20 is promoting climate-related disclosure; it would be a thousand times better if they could agree on the introduction of a kerosene tax."

Hoogervorst also said that there are just too many different sustainability paradigms and standards, and their lack of comparability can confuse stakeholders. He said that there are at least 230 corporate sustainability standards initiatives across more than 80 sectors. 

"To give one example, Tesla is ranked highest in terms of the sustainability index of MSCI, while FTSE ranks it as the worst carmaker globally on ESG issues," he said. "Yet another agency puts it somewhere in the middle. People may be forgiven for not making heads or tails of it. Moreover, with so many standards, the potential for disclosure overload is enormous. Consolidation is clearly needed."