LGIM announced in its new "A guide to ESG transparency" report that, beginning in 2022, it will begin voting against LGIM ESG "transparency" score laggards. Transparency is one of the four areas comprising its proprietary ESG score, as depicted here:
Each of the six transparency metrics (#23 - #28 above) of the 28 total metrics is defined on page 13 of LGIM's rationale and methodology paper. The paper notes that companies whose disclosures are aligned with best practices (based on Sustainalytics) will receive higher scores; companies with poor or no disclosure against these measures will receive negative scores. Scores are updated in March and September.The Guide explains what LGIM wants to see in the way of companies' ESG disclosure, i.e., financial materiality-based disclosure in accordance with the SASB framework, GRI standards, and other widely used standards for issue-specific disclosures such as climate change, in whatever form makes the most sense for the company based on its circumstances (e.g., annual report, a standalone sustainability report, integrated report) subject to evidencing integration of ESG into the corporate mission and strategy and ease of accessibility of the information. LGIM further expects boards to ensure that the company's ESG data used by third-party providers and relied upon by investors is accurate, and encourages obtaining third-party assurance of such data.
This post first appeared in the weekly Society Alert!