Moody’s is winning awards for its sustainability reporting. Natalie GanferSenior Vice President of Sustainability, explains the risk assessment firm’s unique approach
Environmental Finance: Moody’s won Environmental Finance’s Sustainability reporting award for your 2021 Stakeholder Sustainability Report. What do you see as the key objectives of successful sustainability disclosure?
Natalie Ganfer: At the heart of effective sustainability reporting is storytelling – from where your company has been, its current state of play and, crucially, its direction of travel. For Moody’s, communicating with full transparency is, of course, our ultimate goal. After all, that’s the primary objective of disclosure. This entails identifying areas of improvement, communicating how we aim to solve any shortcomings with tangible targets, and offering clear and frequent updates on our progress.
To produce quality reports, a company must first understand the material sustainability topics it faces. At Moody’s, we undertake a materiality assessment in order to align our sustainability priorities with our many stakeholders’ interests. This helps us to provide relevant and accurate disclosures across our sustainability focus areas.
EF: A key issue for your reporting is decarbonisation – what do your stakeholders want to know in this area?
N.G: Our stakeholders are primarily interested in our corporate decarbonisation plan, including our science-based targets for reducing emissions and our progress towards reaching these milestones. Moody’s was one of the first companies to set validated near- and long-term net-zero targets and to put our decarbonisation plan to a stockholder vote.
Stakeholders also ask about how we drive change at scale and support other companies’ decarbonisation plans. We do this in two ways. First, we actively contribute to the industry’s efforts to set standards for climate action and reporting. For instance, we participate in the Task Force on Climate-related Financial Disclosures [TCFD]which has established a framework for reporting financial risks related to climate change.
Second, we provide market participants with the tools, including data and insights, that help them understand their climate risks and opportunities, and help them to integrate ESG and climate considerations into their analysis so that they can build a more sustainable business.
EF: Moody’s was one of the first financial firms to report in line with the TCFD’s recommendations. What challenges did that process pose?
N.G: The main challenge to overcome was that there were fewer points of comparison, which meant we were building the implementation of the standards from the ground up. Another challenge for us has been aligning newly acquired companies to the processes and policies we have in place to comply with TCFD’s standards.
But, with these challenges came the opportunity to be among the companies leading the charge towards more robust disclosures. In doing so, it was important that we harnessed a growth mindset. Being among the first-movers, we accepted that our early implementation wouldn’t be perfect, but would give us a starting point for improvement, while encouraging other companies to begin their journey.
EF: Diversity, equity and inclusion [DE&I] is another of your key themes for reporting. How do you go about measuring and reporting performance on this issue?
N.G: Our stakeholders ranked DE&I as our most important material topic, making it a key part of our strategy and reporting. To promote a more inclusive workforce, we primarily focus on monitoring – at every stage of the employee lifecycle – the representation of women at the global level, as well as race and ethnicity in the United States. Most recently, we disclosed, for the first time, our global pay equity metrics and we are striving to improve our disclosures over time.
While numbers are important, what truly matters are people. At Moody’s, we encourage and harness a culture of listening, making people feel included and valued – and allowing them to bring their authentic selves to work.
EF: How do you plan to continue to evolve your sustainability reporting?
N.G: Our sustainability reporting and our strategy are interconnected, meaning that our disclosures will evolve alongside any changes to our goals and commitments. Additionally, the future of our reporting, similar to other companies, is largely tied to upcoming regulatory requirements. We are dedicating our time to preparing for the anticipated new regulatory landscape so that we are well positioned to comply with any changes.
EF: Finally, there is an urgent need for the financial system to become more sustainable. How is Moody’s contributing?
N.G: Moody’s is helping to create a more sustainable financial system by developing innovative ESG solutions that empower market participants to make better and more sustainable decisions. Of course, this includes integrating ESG considerations into Moody’s Investors Service’s credit ratings and providing transparent analysis on how these considerations impact credit quality at the issuer level. We also provide tools, data and research to help our customers understand ESG-related risks and opportunities, and, ultimately, prepare them for the shift to a greener and more inclusive economy.