Only a fraction of firms are reporting progress against the UN SDGs, making capital allocation difficult, analysis by world's biggest bond issuer PIMCO finds
Poor reporting of company sustainability data is putting global efforts to meet the UN Sustainable Development Goals (SDGs) at risk, analysis by the world's biggest bond investor has found.
A study of more than 240 corporate and financial issuers of bonds conducted by PIMCO found a high awareness of the 17 SDGs, with 63 per cent of companies referencing them in their reporting and 55 per cent mapping their activities to specific goals.
But despite being aware of the goals only 12 per cent of those companies referencing the SDGs had actually set quantitative targets for meeting them, and just six per cent disclosed their progress against them, according to yesterday's study.
PIMCO said the findings indicated many companies "are finding it challenging to translate well-intentioned support into action" and "still lack the expertise to identify activity and targets that can add business value".
Highlighting estimates by the UN Commission on Trade and Development that meeting the 17 goals by 2030 will require $5-7tr of investment each year, it warned that despite growing momentum among corporate issuers to contribute to the goals, overall private sector progress remained "insufficient". It attributed much of the blame to poor reporting of environmental, social and governance (ESG) data by companies.
"Many investors would like to allocate more capital to companies best aligned with the SDGs, but existing levels of disclosure make this difficult to do," PIMCO said.
In order to tackle the gap in corporate reporting and scale up private investment towards the SDGs, therefore, the bond investor called for the development of a common set of impact performance indicators in order to better compare the SDG contribution of companies.
It also urged companies to improve their reporting practices by developing business strategies in line with the SDGs through to 2030. However, it also counselled that firms should identify SDGs most relevant to their business where they can have the greatest impact, rather than opting for generic disclosure across all of the Goals.
"Our hope is that with better disclosure on the SDGs, and the development of an active SDG bond market, investors such as PIMCO will be able to better allocate capital to directly support the Goals," the firm said. "In turn, this should provide more impactful solutions for clients seeking to make positive change through their investment decisions."