SEC Chairman Viraj Dayaratne underscored the importance of companies documenting their Environmental, Social, and Governance (ESG) related data in their annual reports. Dayaratne further linked such information to potentially being part of the material information that could be the duty of companies to report to all stakeholders through market disclosures.
Dayaratne was speaking as chief guest on 9 December at the CA Sri Lanka’s Annual Report Awards ceremony held at the BMICH. Dayaratne noted that in the coming years the Annual Report Awards was to incorporate in a larger scope ESG factors into the assessment criteria.
Dayaratne was of the view that the annual report in terms of documentation was one of the most important things that a company has in its communication with all stakeholders. He was of the view that good corporate governance was reflected in the annual report.
Dayaratne said, “In the long-run good corporate governance pays off.”
Dayaratne highlighted that in an increasingly complex and technologically evolving world the need for companies to stay ahead of the risks posed by public concerns of ESG was paramount. He noted that investors were more likely to invest in companies where the ESG data was disclosed to the marketplace.
Dayaratne noted that in the increasingly conscientious society investors would look at the ESG data as a measure of the potential risk a prospective investor would face when investing in a company.
Dayaratne highlighted that stakeholders were looking to compile ESG indices to be able to compare companies. ESG reporting would also help act as a check and balance on companies thereby bringing discipline and accountability in their dealings. Dayaratne was of the view that the corporate sector would be welcoming of more widespread ESG reporting.