Accounting Seminar: Professor John Roberts
Immature, Impossible, and Inadequate: Making ESG data calculable for investors? John Roberts & Anna Young-Ferris
This paper presents three episodes from a case study of the adoption of the United Nations-supported Principles of Responsible Investment (UNPRI) to explore the challenges of getting environmental, social and governance (ESG) data to investors in a form that allows this to be ‘integrated’ in their investment decision making. Building upon Robson’s (1992) seminal discussion of the stability, mobility and combinability of financial accounting information, these episodes are used to explore three different views of the use and usefulness of ESG reporting data by ‘responsible’ investors. The first view suggests that ESG data is simply an immature form of accounting data that lacks the objectivity, completeness and reliability of financial accounting. Here the paper suggests that processes of standardisation and enhanced assurance may over time produce some degree of stability to these new accounting objects and in this way, aid their mobility and comparability, and hence value to investors. The second view suggests that ESG data is of a fundamentally different nature to financial accounting data and, as a consequence, cannot be ‘integrated’ into investment decision making, except in the marginal form of a risk weighting. Here the paper points to important discontinuities between financial and non-financial accounting information in relation to the scalability and hence combinability of ESG data. ESG information, the paper argues, cannot be easily aggregated in a way that is meaningful, and also cannot be monetised. As a consequence, ESG data cannot participate fully in the calculation of future company value and, instead, can only be applied as a retrospective risk weighting to projections of future company value. The third view explores ESG reporting and the demands of the Principles of Responsible Investment as a wholly inadequate response to environmental and social issues.
John Roberts obtained his doctorate in from the UMIST in 1984. He subsequently held Senior Research Fellowships at the Department of Accounting and Finance at Manchester University, the Centre For Business Strategy at London Business School, and St. Catherine's College Cambridge, before taking up a lectureship at the newly created Judge Business School in Cambridge in 1991. He has worked at the University of Sydney Business School since 2007.
His qualitative research work spans three main areas of interest; the uses of accounting information in processes of organisational accountability, corporate governance and, in particular, the impact of regulation on the dynamics of board roles and relationships, and the nature of ethics in business. His work on accountability began immediately after his doctorate and applied Giddens' structuration theory to explore the uses of accounting information in creating accountability within organisations. This work resulted in a series of early papers in Accounting, Organizations and Society which continue to be widely cited. It was this work that formed the basis of the second focus of his research - corporate governance and, in particular, qualitative studies of board roles and relationships, and company /fund manager meetings. This work has resulted in several empirical and theoretical publications in Long Range Planning, Human Relations, the British Journal of Management, and Accounting, Organizations and Society as well as a series of more practitioner oriented reports. It also influenced UK corporate governance reform by informing the 2003 Higgs review of the Role and Effectiveness of the Non-Executive Director. His third area of research has been into the nature of ethics in business. An early empirical piece drawing upon the work of Alasdair MacIntyre in the Journal of Management Studies was followed by a number of innovative papers. A special issue of Business Ethics Quarterly included one of the earliest papers to introduce the work of Levinas to the academic business ethics literature, and was followed by a widely cited paper in Organization on corporate social responsibility, and most recently in the Journal of Business Ethics. A related innovation has been theoretical work that draws upon psychoanalytic theory and, in particular, the work of Lacan, also published in Organization. His most recent work has combined these themes in analysing and exploring the global financial crisis including two papers, one on self interest and the other on the limits of transparency in Accounting, Organizations and Society, and a forthcoming paper in Culture and Organisation on the role of pay practices in the crisis.