Researchers Eduardo Flores and Eliseu Martins of the University of Sao Paulo have assessed the extent to which Brazilian mining company Vale’s ISSB-aligned sustainability disclosures can be combined with its financial statements to support accounting forecasts.
They found that the combination of the two sets of disclosures offer “verifiable parameters” to support revenue, costs and expenses projections, risk and opportunities assessments, and predictive accuracy.
The report reads: “In summary, the study demonstrated that the disclosure of sustainability related financial information, when connected to the financial statements and assured, offers verifiable inputs for each parameter of a discounted cash flow model and tends to improve the accuracy of the forecasts of the agents that cover the company.”
It continues: “The study suggests that the analyst who ignores the sustainability disclosure of a company of high climate materiality incurs an informational opportunity cost.”
