More and more investors are recognizing the importance of "non-financial" disclosure.
A group of pension fund managers - including BP, CalPERS, and Morley Fund Management - are asking the International Accounting Standards Board to support incentives for voluntary reporting by companies on non-financial performance indicators. Such indicators typically include:
- a company's level of customer satisfaction
- environmental and social performance indicators
- indicators of employees' professional development
- the number of patents it has generated
- related-party transactions
- future political and regulatory risks
- other non-financial data
Investors say that enhanced reporting will help them evaluate companies' risks and competitive advantages, with information that goes beyond traditional financial analysis. A recent report on the Enhanced Analytics Initiative (EAI) from one EAI member, the Universities Superannuation Scheme (USS), shows that ignoring non-financial information can lead investors to "leave alpha on the table".
Join the Conversation