Work Streams

Financial Materiality

The Beacon Project

Young Financial Analyst Perspectives on the Financial Materiality of Environmental and Social Issues to Securities Pricing

UNEP FI has joined forces with the World Business Council for Sustainable Development's (WBCSD) Young Managers Team to understand better the opinions of young securities analysts on the potential of environmental, social and governance (ESG) information to impact their analyses.

Project Recommendations

• Sustainability advocates could group environmental, social, and governance issues as intangibles along with reputation, strategic vision, brand equity, and other subjectively-valued, but undeniably material, intangibles.
• The term non-financial is best avoided, as are moral arguments.
• To overcome the widespread cynicism over materiality, it will be important to put forth credible, specific examples.
• Financial institution executives could consider communicating internally their commitment to incorporate environmental, social, and governance issues, and clearly linking analysts’ career progress and remuneration to analysis of environmental, social, and governance issues.
• It will be important to invest in education and the development of quantitative and qualitative tools for such analysis.
• WBCSD, UNEP FI, and other partnerships could encourage our members to solicit and present environmental, social, and governance information at corporate results presentations, showcase good examples and institute an annual prize for incorporating environmental, social, and governance research.