Improving corporate accountability through more disclosure and frameworks is reaching a limit. Too often sustainability disclosure regulations have assumed that if information is disclosed then it will be analysed, but this is not true. Consequently, there is a critical lack of capacity for in-depth analysis across the corporate scrutiny ecosystem, which is all actors assessing companies such as audit, investors, non-profits, and journalists.
This lack of depth leads to formulaic sustainability assessments that cannot handle the complex relationship between sustainability goals and profit. This contributes to the headaches facing sustainable investing. In contrast, more in-depth scrutiny could help build consensus between companies, investors, and government on the solutions to market failures.
The report provides an initial review of the corporate scrutiny ecosystem and argues that non-profits have a unique role to play in providing research that is in-depth, independent, and open. It then proposes a range of actions to increase the capacity for in-depth analysis from a platform to aggregate non-profit scrutiny to reforming sell-side research, and empowering non-executive directors.
