BofA chief leads new effort to tame unruly ESG metrics – Financial Times

BofA chief leads new effort to tame unruly ESG metrics  Financial Times

Brian Moynihan, chief executive of Bank of America, is spearheading a campaign to standardise how companies measure their contributions to the UN’s sustainable development goals, as frustration mounts over metrics for social and environmental impact.

The latest effort to tame the unruly field will be launched at the World Economic Forum’s annual meeting in Davos next week, enlisting the four large global accounting firms.

Companies want harmonised metrics for the UN goals “so we don’t have to argue with everybody”, Mr Moynihan said. “Right now, you can hit something and then somebody else has something else they want to measure.”

Each of the big four accounting groups is being asked to create standard metrics for a separate SDG-related theme: governance, human capital, prosperity and environment.

Investors have already been served an alphabet soup of acronyms representing different measurement systems, from providers ranging from index compiler MSCI to the Taskforce on Climate-related Financial Disclosures (TCFD), a non-profit organisation established by Mark Carney and Michael Bloomberg.

Mr Moynihan’s effort does not intend to create new metrics but to craft a rating system from work already done by groups such as the Sustainable Accounting Standards Board (SASB).

Mr Moynihan, chairman of the WEF’s International Business Council, hopes that addressing the uncertainty about how to measure sustainable investments will encourage private investors to put more money toward achieving the SDGs.

The work underscores the finance industry’s scramble to address environmental concerns. On Tuesday, Larry Fink, chief executive of BlackRock, the world’s largest asset manager, called for companies to report climate risks as directed by SASB and the TCFD — something which, if supported by other asset managers, could help winnow the wide range of metrics companies have been pressured to report.

Mr Moynihan’s effort has the support of Klaus Schwab, WEF founder and chairman. “If you want to measure something, you have to define what you measure,” Mr Schwab said in an interview with the Financial Times.

Mr Moynihan said Bank of America would use the SDG rating system across its business, from credit assessments for its lending arm to portfolio construction for clients of the Merrill Lynch wealth management arm.

Some of the financial advisers at his company were not embracing sustainable investing, he said. Clients were increasingly demanding such investments, however.

“Our job is to make sure they get the returns plus invest in those companies that are driving the progress,” Mr Moynihan said.

Source: ft.com

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