Sustainabilty Reporting Needs Independent Auditing

Shanny Basar

Catherine Raw, chief financial officer of miner Barrick Gold and previously co-manager of BlackRock’s flagship mining funds, said sustainability reporting needs to be audited in the same way as financials to become credible.

Raw spoke at the Bloomberg Sustainable Business Summit in London today. She was appointed chief financial officer of Barrick Gold in April last year. She joined the miner in May 2015 as executive vice president, business performance, and was previously co-manager of BlackRock’s flagship mining funds.

She said: “Sustainability is all about the bottom line and making decisions based on sustainability can make good business sense.”

Raw continued that as an ex-fund manager, she expects companies to create and protect value, and one way of doing that is to reduce energy costs and switch to renewables.

“In Canada where there is carbon pricing in Ontario we have decreased greenhouse emissions by 24%,” she added. “We are applying that across all of our businesses.”

In addition, she said corporates will suffer if they do not make the sustainability disclosures demanded by investors.

“Sustainability reporting is not audited in the same way as financials and that is required,” added Raw. “That will happen within three years.”

Dirk Voeste, vice president, sustainability strategy, at BASF said the chemical manufacturer uses a carbon price of €74 to evaluate investments, which is 10 times the current  price set by the EU.

“Our assets need to last 40 to 50 years,” Voeste added. “We also analysed all of our 60,000 products and found that the ones that made the highest contribution  to sustainability were the fastest growing and also the most profitable.”

A panel on green bonds at the summit said issuance this year is expected to reach a record $135bn (€114bn). In comparison issuance last year was $99bn, up from just $4.3bn in 2012.

Suzanne Buchta, global head of green bonds at Bank of America Merrill Lynch, said green bonds could be classified by the proceeds being used to finance a green project or a transition to a low carbon  economy.

“Green bonds have the same coupon as a regular bond and issuers have to report on the use of proceeds,” Buchta added. “Financials were the largest issuers last year and this year it is corporates, which is the holy grail.”

Sovereigns have also issued green bonds including Poland last year and France which raised a total of €8.5bn this year. “The French bond was important to add credibility and liquidity,” she continued.

Tanguy Claquin, head of sustainable banking at Credit Agricole CIB, said at the conference: “Issuance has taken off in Asia this year beyond China. There is not a single jurisdiction in the region that is not active.”

Claquin continued that European regulation is being developed for the green bond market. He said: “There will be an evolution of regulation with science-based decisions on what is green, but that will take time.”

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