The Prince’s Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI), commissioned Radley Yeldar to undertake research into how investors and analysts source, use and are influenced by extra-financial information. Extra-financial information incorporates a wide range of issues which are likely to have a short, medium or long-term effect on business performance and typically exist beyond the traditional range of variables that are considered as part of investment decision-making processes.
The report shows that extra-financial information – such as disclosures on governance and environmental issues – has become an important and influential consideration for investors and analysts.
Key research findings include:
- governance information is the most relevant type of extra-financial information for investors and analysts, with 70% of respondents rating it very relevant
- 64% of respondents said information on natural resources is very relevant to their analyses of companies
- 52% say social and community information is very relevant
- Comparability of extra-financial information between companies is an issue: 61% said they find social information difficult to compare and 41% said they find environmental information difficult to compare, while only 3% said they find it difficult to compare financial information between companies
- Over 80% of investors and analysts believe that integrated reporting will deliver benefits to their analysis or company assessments
- Nearly half of investors and analysts (46%) state that direct engagement with the CEO or CFO on extra-financial issues is very likely to influence their investment decisions or company analysis, slightly more so than other corporate reporting channels such as the sustainability report, annual report or integrated report
- Voluntary frameworks for reporting extra-financial information play an important role in decision-making and company analysis, especially the GRI Sustainability Reporting Framework and the Carbon Disclosure Project
Download “What Investors and Analysts Said” – The value of extra-financial disclosure here, and read the press release here.