Majority of fund managers dissatisfied with company disclosure

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Over two-thirds of fund managers find the non-financial disclosure of European companies inadequate, according to research by Eurosif and the Association of Chartered Certified Accountants.

Overwhelmingly, 93 per cent of fund managers disagreed that current levels of non-financial disclosure are sufficient to assess materiality and called for greater consistency and transparency when it comes to corporate sustainability reporting.

Disclosure of this information is deemed as very important to fund managers trying to assess the outlook and sustainability of a company, with 89 per cent agreeing that such reporting should be forward looking in addition to providing information on past performance.

With the majority seeing non-financial disclosure as linked to corporate social responsibility reports, 78 per cent of fund managers disagreed that the current levels of this disclosure was adequate. Some 84 per cent said established standardised reporting frameworks should be implemented to aid consistency and transparency.

The survey follows new requirements by the European Commission in April 2013 to improve non-financial reporting of large companies within the EU. ACCA sustainability adviser Gordon Hewitt believes the survey’s findings show there is room for improvement in what is currently required from these companies.

“The feeling of the survey’s results is that policymakers could improve upon the commission’s proposals by looking at introducing mandatory environmental, social and governance key performance indicators; encouraging the use of and harmonisation of existing reporting frameworks to increase comparability; and improve accountability mechanisms for non-financial information,” Hewitt says.

Eurosif executive director François Passant adds: “A disconnect exists between company’s non-financial reporting and investors’ expectations as highlighted by the survey. The commission’s recent proposal represents a unique opportunity to bridge this gap but needs to be strengthened in some areas. By doing so, we are confident that Europe would bolster its competitiveness.”

The research was compiled from 94 different surveys polling analysts and investors from large mainstream to small specialist funds. With respondents across 18 countries, 21 per cent of those polled were from the UK.