Investors and analysts are examining
extra-financial information reported by companies to help analyse
performance and influence investment decisions, according to a
report by the Global Reporting Initiative (GRI), The Prince of
Wales’s Accounting for Sustainability Project (A4S) and corporate
communications consultancy Radley Yeldar.

The report,
What Investors and Analysts Said
, concludes that
information such as disclosures on governance and environmental
issues are now important and influential considerations.

The survey reveals governance information as
the most relevant type of extra-financial information, with 70% of
respondents rating it as very relevant. Information on natural
resources is very relevant, according to more than half (64%) of
respondents with 52% also judging social and community information
as very relevant.

GRI, A4S and Radley Yeldar speculate the
relatively lower relevance of social and community information
could be due to difficulties in comparing companies’ performance in
these areas. More than half of respondents (61%) said they find
social information difficult to compare, whereas only 41% said the
same about environmental information, with just 3% finding it
difficult to compare with financial information.

A4S project director Sarah Nolleth said all
three organisations are “delighted to see that the investor
community is increasingly seeking extra-financial information as
part of the decision-making processes” as this will “help
sustainability considerations become embedded into investors’
assessments of a company’s long-term value”.

“The report highlights the importance of
integrated reporting, but it’s important to remember that companies
also need ‘integrated thinking’, that is, embedding sustainability
into their decision-making and strategy, as the precursor to
successful integrated reporting,” Nolleth noted.

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By GlobalData

GRI’s deputy chief executive Nelmara Arbex
remarked that the research is “one more piece of evidence showing
how organisational disclosure on sustainability impacts is popular
among investors”.

Arbex confirmed GRI expects the demand for
sustainability performance-related information to increase and
sustainability reporting to become “standard practice”.

The report also investigated preferred
communication channels and formats for receiving extra-financial
information. Respondents reported using a wide range of sources to
gather both financial and extra-financial information, with some
channels – notably PDF publications – more popular than others.

“The research demonstrates investors and
analysts rely on tried and tested channels of communication –
namely reporting and dialogue with companies – though this tends to
be part of a blended approach to information gathering. If they
need specific details, they’ll use specialist sources. This means
reporters need to clearly guide these audiences through their
disclosure, which often appears in a number of places on their
corporate websites,” Radley Yeldar head of sustainability Ben
Richards said.