The UN Sustainable Development Goals -– “What Matters” For 40 Sectors? G&A Institute’s Research Project Yields Key Data

by Hank BoernerG&A Institute Chair & Chief Strategist

  • An examination of materiality decisions made by 1,387 corporations in their sustainability / ESG reports on all 91 GRI G4 Specific Standard Disclosures, linked SDG Targets, and GRI Standards Disclosures 
  • Forty individual sector reports including the “Top GRI Indicators / Disclosures” and “Top SDG Targets” rankings for each sector are available for download at https://www.ga-institute.com/SDGsWhatMatters2018

Nearing the end of the 20th Century, the United Nations assembled experts to develop the eight Millennium Goals (the MDGs), to serve as blueprints and guides for public, private and social sector actions during the period 2000-2015 (the “new millennium”).

For “post-2015”, the more ambitious Sustainable Development Goals (the now familiar SDGs) were launched with 17 goals and 169 targets.

These are calls to action for rich and poor and middle-income nations from 2015 out to the year 2030.  These ambitious efforts are focused on such societal issues as improving education and health; social protection; providing job opportunities; and encouraging greater environmental protection (global climate change clearly in focus!).

The 17 SDGs are numbered for themes – “No Poverty” is Goal #1; “Clean Water and Sanitation” is Goal #6; Gender Equality is Goal #5.

As the goals were announced after an exhaustive development process (ending in 2015), sovereign nations, regions, communities, corporations, academic institutions, and other societal stakeholders began “adopting” and embracing the goals, and developing action plans and programs related to the goals.

Numerous companies found (and are finding today) that the goals aligned with the long-term corporate strategies (and vice versa).

SDG strategies were and are being amended to align the goals with critical corporate strategies; actions and programs were formulated; partnerships were sought (corporate with government and/or social sector partners and so on).  And the disclosures about all of this began to appear in corporate and institutional GRI sustainability reports.

In the months following official launch, a wave of corporations began a more public discussion of the SDGs and their adoption of specific goals – those that were material in some way to the company’s strategies, operations, culture, stakeholders, geography…and other factors and characteristics.

As the SDGs were “adopted” and embraced, companies began quickly to examine the materiality of the SDGs relative to their businesses and the first disclosures were appearing in corporate sustainability reports.

To rank the materiality of the SDGs for 40 different sectors, the G&A Institute analyst team gathered 1,387 corporate GRI G4 Sustainability / ESG reports and examined the disclosure level of each on 91 Topic Specific Standard Disclosures.  The database of the reporters materiality decisions around GRI Indicators were then linked to the 169 SDG targets using the SDG Compass Business Indicators table.

The sectors include Electricity, Beverages, Banks, Life Insurance, Media, and many more classifications (the list is available on the G&A web platform with selections to examine highlights of the research for each sector).

The results:  we now have available for you 40 separate sector report highlights containing rankings of the SDG Targets’ and the GRI G4 Indicators & GRI Standards Disclosures for each sector which can be downloaded here:  https://www.ga-institute.com/SDGsWhatMatters2018

The research results are an excellent starting point for discussion and planning, a foundation for determining sector-specific materiality of the SDGs and the GRI KPIs and disclosures as seen through the lens of these 1,387 corporate reporters across 40 sectors.

This is all part of the G&A Institute’s “Sustainability Big Data” approach to understanding and capturing the value-added corporate data sets for disclosure and reporting.  The complete database of results is maintained by G&A Institute and is used for assisting corporate clients and other stakeholders in understanding relevant materiality trends.
We welcome your questions and feedback on the year-long research effort.

Thanks to our outstanding research team who conducted the intensive research: Team Research Leaders Elizabeth Peterson, Juliet Russell, Alan Stautz and Alvis Yuen.  Researchers Amanda Hoster, Laura Malo, Matthew Novak, Yangshengjing “UB” Qiu, Sara Rosner, Shraddha Sawant, and Qier “Cher” Xue. The project was architected and conducted under the direction of Louis Coppola, Co-Founder of G&A Institute.

There’s more information for you at: https://www.ga-institute.com/SDGsWhatMatters2018

More information on the SDGs is at: https://www.un.org/sustainabledevelopment/

Contact G&A Institute EVP Louis Coppola for information about how G&A can help your company with SDGs alignment at:  lcoppola@ga-institute.com

State of Corporate Sustainability, GreenBiz Releases Latest Update — Top Lines: (1) We are making progress and (2) There are still challenges

by Hank Boerner –  Chair and Chief Strategist – G&A Institute

It’s now three-quarters of the way through the year 2018 – what is the state of the Sustainability Profession?  John Davies, writing in GreenBiz (he’s VP & Senior Analyst), shares some interesting highlights gained through the firm’s recent report with us this week.

Among the major themes:  (1) Companies large and small see advances – progress – more companies are communicating what they are doing.  (2) Serious concerns, challenges, barriers are still ahead (look at what is happening to the US SEC and the dismissal of sound science by policymakers).

The Greenbiz report on the state of the profession is always eagerly awaited (every-other-year) and the latest (the 2018 report) is available for you (the link is in the Top Story).

GreenBiz presented results of its research on such items as gender pay equity trends; the embedding of the sustainability role(s) throughout the organization; more professionals coming in to the firm from outside vs. being promoted from within; and, the corporate sustainability programs becoming more sustainable.

There is also an interesting collection of news items we’ve selected for you that describes the range of activities within industries as companies of all sizes as the “corporate sustainability wave” gains momentum.  It’s below the Top Story for you.

This Week’s Top Story

The State of the Sustainability Profession, 2018
(Tuesday – September 25, 2018) Source: GreenBiz – That’s a significant change from 2011, when the Governance & Accountability Institute found just under 20 percent of S&P 500 companies were publishing such reports.

And we call your attention to:
Sustainable Brands Delivers Insight on How to Build Better Sustainability Metrics
(Friday – September 28, 2018) Source: Sustainable Brands – Sustainable Brands® reveals program, networking and activity highlights for its upcoming conference: New Metrics 2018. Nearly 400 business executives will convene October 29-31 at the Loews…

It’s ESG Survey & Query Time — Public Companies Are In Response Mode

by Hank Boerner & Louis Coppola

Barrage… Avalanche… Tidal wave… Tsunami“Survey Fatigue…
These are terms we hear all year ‘round but especially in the spring of the year as corporate managers describe for us what they often feel as the inevitable flow of third party ESG / Sustainability surveys, forms and various types of questionnaires come pouring their offices. It’s spring – survey time!  Some large-cap companies may receive 200 or more such queries during a year.  What to do!

Effective Response and Engagements Will Be Key to Success
in Communicating Corporate Sustainability Strategies and
Demonstrating Leadership for Investors

The challenges posed to company managers are:

  1. First to decide which queries will matter most to the company and to investors and select those out of the large flow for response;
  2. decide what to do with the rest of the third party queries;
  3. decide what information to be disclosed is material, of relevance and of importance to the third party and beyond to that organization’s user base;
  4. internally source and organize the data and narrative needed in responding to put the best story forward to maximize the positive perceptions of the stakeholders using the data in some way;
  5. and as we hear, [typically] debate internally what can and should be disclosed and why — beyond the mandated financial and related disclosures.

These challenges grow in importance each year as many more asset owners and managers either directly pose the questions to companies — or do so through an army of third-party ESG analytics firms.

The stakes are high and getting higher; the most efficient and effective of the corporate responders could enjoy inclusion in the sustainable investing indexes and benchmarks, and investor products; win high rankings, scores, ratings and other honors bestowed by the third party organizations; and in turn, be recognized by still more third-party organizations for their high scores and rankings.

Questions Often Heard in the Corporate Office: 
How come we are not in the DJSI?
How come “competitor X” is ranked higher than we are?
What should we be doing to improve our scores?
Who are the most important providers to engage with and respond to?

THE MORE TRANSPARENT COMPANY – THE PUBLIC COMPANY ESG PROFILE
Beyond the challenges to responding to the many third party organizations that crank the response and other information into their models and into investor-facing products, there is an ever-widening transparency of the company profile that may be of importance say, to major customers or business partners: for example, the Bloomberg professional services ESG dashboard will put the company’s ESG data and profile in front of more than 300,000 subscribers.   Similarly, the Thomson Reuters’ Eikon dashboards reach 200,000 and more subscribers with the same kinds of information.

We can hear the call from the corporate offices this month — Help!  The spring round of queries is at hand. For example, RobecoSAM’s “Corporate Sustainability Assessment” (the CSA) opened for company response last week; companies have only until the end of May to respond.  (We recently conducted a workshop in NYC for first time reporters in collaboration with RobecoSAM’s Robert Dornau and Gretchen Norwood.)

The information provided by companies in responding to the CSA will be an important determinant in RobecoSAM deciding which companies will be in the Dow Jones Sustainability Indexes and featured in the prized Yearbook roster. The information is used in S&P Dow Jones Company’s various products as well.

HOW TO ADDRESS THE CHALLENGES IN RESPONDING
 The good news is that there are efficient, thorough, comprehensive and organized ways to meet the challenges described above that are faced by many managers at publicly-traded and even privately-owned enterprises.

Here at G&A Institute, we call this our matrix approach that results in a more comprehensive “mosaic” (multi-dimensional) corporate ESG profile with significant benefits for the issuer.

It is important to keep in mind: the public company already has a sustainability profile shaped by its own publicly-disclosed information, by the dissemination of information by third parties distributing ESG analysis and data sets and by such stakeholders as government agencies, media, NGOs, activists, competitors, and others.

This mosaic corporate profile may be incomplete, inaccurate, misleading, or otherwise have information that is detrimental to the company and its stakeholders that can be corrected with more timely and/or accurate information. The “wrong information” can lead to negative perceptions that can affect corporate reputation and valuation, and perhaps even societal freedom to operate.

THE G&A INSTITUTE APPROACH TO ESG DATA REVIEW
We usually start with an examination of the existing public ESG profile of the corporation.  This is the information typically provided to investors and key stakeholders by a ever-expanding universe of the ESG rankers and raters.  This phase of the work this helps us and the internal team in developing an understanding of how investors and stakeholders may be viewing the company, what issues are most material in their view — and from this analysis we can provide strategic guidance for how the company can work to better position itself to take advantage of any advances in corporate sustainability over the months and years ahead.

The comprehensive sweep of first-round examinations can be for a key set of the most important data providers (around 4-to-6) or more comprehensive and up to 15 or more of the ESG data providers, index managers, asset managers and public information platforms (such as the data on the Bloomberg and on Eikon).

The specific third party service providers to be examined may depend on peer group, geography of operations, the company’s sector and industry classifications (and keep in mind there are variations of these), the nature of products and services, and other factors.

IMPORTANCE OF THE GAP ANALYSIS
Once the key third party organizations are selected for close examination, an internal gap analysis against the information being made available to investors by the third party provider can be determined – and addressed by the internal team.

Key areas of strength, weakness and the peers’ standings will emerge for internal managers to address. Low hanging fruit such as correcting inaccurate data, or improving reporting by better organizing important ESG disclosure data, may make it easy for short-term improvement.  Longer term the results of this type of analysis and engagement will inform strategy setting, and resource allocations to most efficiently and effectively improve the ROI of the Sustainability program.

G&A’s Co-Founder Louis Coppola was recently interviewed at Skytop Strategies ESG4 Summit on the “Value Companies Can Obtain by Engaging with ESG Investor Data Providers.”  You can watch the interview here and email Lou at lcoppola@ga-institute.com if you have questions or would like to discuss the ESG review process.

KEEP IN MIND:
Improving the ratings, rankings, scores etc is a journey, not a sprint.

It’s important here to stress that whether or not a company chooses to answer queries, respond to data provider inquiries or attempts to correct some public information that service providers are sharing with investors, there is a public sustainability profile out there and it is making an impression on investors.

As the flow of this year’s queries reaches corporate managers, it is important to understand who some of the key third party ESG players are — and what their work is about – and how they can impact the corporation.  We provide some recent news updates about leading players below for your information.

FOR YOUR FURTHER INFORMATION: NEWS ABOUT KEY ESG / SUSTAINABILITY DATA PROVIDERS

The Universe of ESG Rankers Serving Institutional Investor Clients Expands…
Source:G&A Institute’s To the Point! Management Briefs (January 2018)
ISS’ Traditional Corporate Governance Focus Expanding to Encompass Environmental & Social QualityScores for Roughly 1,500 Public Companies Coming in January…And Expanding to 5,000 Issuers in Q2…

ISS Unveils New Corporate “E” and “S” QualityScores for 1,500 Companies
Source:G&A Institute’s To the Point! (February 2018)

Oekom Research to Join Institutional Shareholder Services
Source: oekom research news (March 2018)
oekom research, a leader in the provision of environmental, social, and governance (ESG) ratings and data, as well as sustainable investment research, today announced it will join Institutional Shareholder Services Inc. (“ISS”). Reflecting the strength of both brands, oekom research will be renamed ISS-oekom…

Sustainalytics’ New Research Report Offers Insight into ESG Risks Facing 10 Sectors
Source: Sustainalytics (February 15, 2018)
Sustainalytics, a leading global provider of ESG and corporate governance research, ratings and analytics, today released a new thematic research report – “10 for 2018: ESG Risks on the Horizon”.  The report examines critical ESG risks facing 10 sectors, which are classified under four broad themes, including: Water Management / Stakeholder Governance / Consumer Protection / Climate Change..

Morningstar & Sustainalytics Expand Sustainability Collaboration
Source: Sustainalytics (July 2017)
In a continuing and growing commitment to helping investors integrate sustainability considerations into portfolio decisions, Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, and Sustainalytics, a leading global provider of environmental, social, and governance (ESG) research and ratings, today announced that Morningstar has acquired a 40 percent ownership stake in Sustainalytics. The direct investment represents an important milestone in Morningstar’s long-term sustainability strategy and intends to support Sustainalytics’ ability to deliver high-quality, innovative ESG products and services to the global investment community…

Bloomberg ESG Function for Sustainability Investors Adds RobecoSAM Data
Source: Bloomberg (September 2016)
Bloomberg recently expanded its offering of ESG (environmental, social, governance) data by incorporating information from RobecoSAM’s percentile rankings on the Bloomberg Professional service at ESG<GO> —  a Bloomberg Terminal function that provides sustainability investors with data about a company’s environmental, social and governance metrics…

RobecoSAM Publishes “The Sustainability Yearbook 2018”
Source: RobecoSAM (February 2018)
RobecoSAM, the investment specialist that has focused exclusively on Sustainability Investing (SI) for over 22 years, today announced the publication of “The Sustainability Yearbook 2018”.    The Yearbook showcases the sustainability performance of the world’s largest companies and includes the top 15% per industry, which are awarded Gold, Silver or Bronze Class medals. RobecoSAM has analyzed the corporate sustainability performance of the world’s largest listed companies every year since 1999…

Results Announced for 2017 DJSI Review
Source: RobecoSAM (September 7, 2017)
S&P Dow Jones Indices (S&P DJI), one of the world’s leading index providers, and RobecoSAM, an investment specialist focused exclusively on Sustainability Investing (SI), today announced the results of the annual Dow Jones Sustainability Indices (DJSI) review. The three largest additions and deletions…

MSCI:  2018 ESG Trends to Watch
Source: Commentary by Linda Eling-Lee, Global Head of ESG Research, MSCI  (January 2018)
Bigger, faster, more.  Whether due to policy, technological or climatic changes, companies face an onslaught of challenges that are happening sooner and more dramatically than many could have anticipated.  Investors, in turn, are looking for ways to position their portfolios to best navigate the uncertainty. In 2018, these are the major trends that we think will shape how investors approach the risks and opportunities on the horizon. In 2018, investors will…

Has ESG Affected Stock Performance?
Source: Commentary by Guido Giese – ED, Applied Equity Research, MSCI
Are ESG characteristics tied to stock performance? Many researchers have studied the relationship between companies with strong environmental, social and governance (ESG) characteristics and corporate financial performance. A major challenge has been to show that positive correlations — when produced — explain the behavior. As the classic phrase used by statisticians says, “correlation does not imply causation.”Instead of conducting a pure correlation-based analysis, we focused on understanding how ESG characteristics have led to financially significant effects…

CDP:  The Disruptors:  Paul Simpson, the Atypical Activist Who Awoke C-Suites to Climate Risk
Source: Ethical Corporation (November 2017)
The founder of CDP tells Oliver Balch how the organization he started 17 years ago has helped transform corporate and investor attitudes to climate change  The phrase “task force” is hardly one to get the heart racing. Expand it to the Task Force on Climate-related Financial Disclosures, and you’re into catatonic territory. So it’s little wonder that when the TCFD (as insiders call it) issued a suite of recommendations over the summer, it didn’t trouble the headline writers much. Not so Paul Simpson, who met the news with huge excitement…

Our Governments Have Committed to Keeping Global Temperature Rises to Well Below 2-Degrees – What Can Companies and Cities Do…
Source: CDP Campaigns
The Paris Agreement sends a clear signal that the shift to a low-carbon economy is inevitable, and everyone must play their part. To facilitate this transition, CDP and its partners have developed campaigns that seek to highlight and spur meaningful action on tackling climate change from the private sector and sub-national governments…campaign information…. committed to keeping global temperature rises to well…

The Media – And Sustainability & CR Thought Leadership, For Both Topic-Focused and Mainstream Media Coverage

by Hank Boerner – Chair, G&A Institute

The “media” that we choose to get our news, commentary, research results, even crossword puzzles, movie reviews, the latest scientific papers and maybe information about what our friends are up to (such as “social media”) are usually self-selected.  

We tune in to what we want to read or watch or listen to…for information / education / entertainment…and it also helps to define us in many ways.

So here at G&A Institute as we broadly monitor for content related to both our day-to-day and long-term focus areas (the list of topics and issues is long), when we see these things pop up in “not-the-usual places,” we are cheered.

This weekend, for example, we picked up on the following, which were encouraging in that senior management publications are read beyond the folks involved in sustainable investing and corporate sustainability or ESG issues and topics.

In Focus:   MIT Sloan Management Review

This is the publication of the prestigious Massachusetts Institute of Technology’s MIT Sloan School of Management.  “Share Your Long-Term Thinking” was one feature article. Companies need to be more forthcoming about their strategies for long-term value creation when they communicate with investors — especially about ESG issues, write authors Tim Youmans and Brian Tomlinson.

Their observation is that over the past five years, CEOs have faced mounting pressure to produce short-term profits. CEOs do think about the long-term, have long-term plans (detailed and extensive) and these typically are closely held.  Result: corporate strategy and practice are not captured in investor communications.

They then offer six reasons why long-term plans should be disclose and how to do that.  One of these is to help investors understand ESG issues through the eyes of management — because a majority of investors see ESG factors as financially material and expect sound management of material ESG factors to deliver better performance over the long-term. 

Tim Youmans is engagement director for Hermes Equity Ownership Services and Brian Tomlinson is research director for the Strategic Investor Initiative at CECP.

They conclude for the magazine’s audience (aimed at corporate executives and senior managements in the main): “The long-term plan is a new tool in the regular sequence of periodic corporate-shareholder communications and represents an unprecedented opportunity for leading companies and investor together to drive sustainable value creation and help to clarify the role of the corporation in a sustainable society.”

That is not all for the MIT Sloan Management Review audience in the Spring 2008 issue.

“Why Companies Should Report Financial Risks From Climate Change” is another feature — this from Robert Eccles and Michael Krzus.  They  focused on the Financial Stability Board’s Task Force on Climate-related Disclosures [recommendations].

“Investors and the rest of the world is watching to see how companies will respond to the TFCD recommendations” — the ask here is that company managements will expand their disclosure to report on the risks and opportunities inherent in climate change in such documents as the 10-k.

Boston Common Asset Management LLC and ShareAction organized a campaign with institutions representing US$1.5 trillion in AUM participating to pressure financial institutions (especially banks) to implement the recommendations.

Companies should follow the recommendations, authors Eccles and Krzus argue, because this could lead to evolving better strategies to adapt to climate change — and be able to explain these strategic moves to the their investors.

They focus on the oil and gas industry, looking at disclosures in 2016 by 15 of the largest industry firms listed on the NYSE.  A few have made good progress in adhering to the TCFD recommendations (so there is not a “blank slate”); there is work to be done by all of the companies in enhancing their disclosures to meet the four top recommendations (in governance, strategy, risk management and metrics and targets areas).

Their article is an excellent summation of the challenges and opportunities presented for such companies as BP, Chevron, ExxonMobil, Sinopec, Statoil, Total, and others in oil & gas.

Bob Eccles is a well-known expert in corporate sustainability and sustainable investing and is visiting professor at Said Business School at the University of Oxford. Mike Krzus is an independent consultant and researcher and was a Fellow of G&A Institute.

Wait, there’s more!

The magazine’s columnists had important things to say as well.

Kimberly Whitler and Deborah Henretta penned “Why the Influence of Women on Boards Still Lags,” applauding the rise of the number of women on boards and offering two important criticisms — the growth rate is slowing and boards do that do have female members often limit their influence.

Although there are measurable positive results of female board inclusion — they cite Return on Equity averaging 53% higher in the top quartile than in the bottom — women still are not making more rapid inroads with fewer reaching the most influential board leadership positions, even with more women on boards than 10 years ago.

The authors set out ways for making more progress in board rooms.  And they advise: “For real, lasting change that wins companies the full benefits of gender-diverse decision-making, boards need to look beyond inclusion — and toward influence.”

Kimberly Whitler is assistant professor of business adminstration at the University of Virginia’s Darden School of Business; Deborah Henretta is an independent board director on the boards of Dow Corning, Meritage Homes Corp, NiScource Inc and Staples (she was a Proctor & Gamble executive).

There is much more for executives and board members in the issue, which has the overall theme of: “In Search of Strategic Agility – discover a better way to turn strategy into results.”

The content we outlined here is powerful stuff (our own technical term) to crank into corporate strategy-setting, and savvy execs are doing just that, as we see here at G&A as we pour through the more than 1,500 corporate reports we analyze each year with titles such as Corporate Sustainability, Corporate Responsibility, Corporate Citizenship, Corporate Environmental Sustainability, and more.

And so it is very encouraging when we wander beyond the beaten path of reading the reliable staple of sustainability-oriented and CSR-oriented media to see what the senior management thought leadership media are doing!

We recommend that you read through the Spring 2018 Strategy magazine from MIT Sloan.  Link: https://sloanreview.mit.edu/

They Are Beginning Now – the Long-Awaited Corporate Disclosures on Ratio of CEO Ratio – CEO Pay-to-Median-of-Workforce Pay

by Hank Boerner – Chairman & Chief Strategist, G&A Institute

The big-deal and long-waited corporate announcements / disclosures are beginning in 1Q 2018. 

Way back when…after the 2008 financial crisis when the Dodd-Frank capital markets reform legislation was passed (in 2010)…one of the requirements was that public companies must develop a ratio and disclose this publicly: how much does the CEO earn, and what that is that compared to the median compensation of the employee workforce? (Half below/half above is the median level to be arrived in an analysis for public filing.)

This is the Ratio, CEO Pay-to-Median-Worker-Pay disclosures.

The Securities & Exchange Commission finally issued its guidance on all of this in September 2017 (companies and their trade associations had steadily pushed back on the 2010 disclosure mandate and the SEC struggled with the “how-to” rulemaking / or more “gentle” guidance, causing delays in applying the law).

So – today the CEO-Employee Pay Ratio is upon us – and the first important disclosures are coming out now – including the first filing for a S&P 100 firm.

Bloomberg Markets News reports that Honeywell International Inc’s filing shows that CEO Pay is 333 Times More Than Median Workers. CEO Darius Adamczyk’s pay package was $16.5 million in 2017; the median employee pay (for the company’s 130,000 workers) is $50,296.

The Honeywell CEO package for 2017 is 60% more than for the prior year (when he moved into the job).

Earlier this month Teva Pharmaceutical Industries disclosed a pay ratio of 302-to-1 ($19.4 million for the CEO, median worker $64,081).

The AFL-CIO projected a 347-to-1 ratio (CEO: $13.1 MM; workers, $37,000).

When the SEC guidance was firmed up in 2017, some market observers said this was a “local newspaper headline” and not something that serious investors would pay attention to.

The Los Angeles Times – both a regional newspaper and one with national reach and influence – now features this headline: “The First Official Report on CEO-Worker Pay Ratios Shows and Enormous 333-1 Gap at Honeywell”

LAT’s Pulitzer Prize-winning financial commentator Michael Hiltzik used words like “…obscene…raw figures…economic inequality…the 1%…telling…massively embarrassing..”

Sam Pizzigati, the prominent author and social commentator at the Washington DC think tank Economic Policy Institute, was quoted in the LA Times article:

“This is a confirmation of research done up to now,” Sam Pizzigati, a fellow at EPI, says of the Honeywell data. He expects some corporations to show much larger discrepancies. That could show up especially in the retail sector, where median earnings are likely to be well below the $50,000 level of Honeywell’s heavily professional workforce.

Walmart, for instance, says its average hourly pay for full-time workers was to reach $13.38, following a company-wide wage increase in 2016. That’s about $27,800. Its CEO, C. Douglas McMillon, was paid $22.4 million last year. That would create a ratio of about 805-to-1 based on hourly wages alone.

Bloomberg BusinessWeek writer Anders Melin published a piece in January – “Why Companies Fear Disclosing CEO-to-Workers Pay” — noting:

“U.S. companies must soon begin disclosing what many would rather keep secret: The ratio between the CEO’s compensation and the paycheck of the company’s median worker. The mandate was included in the 2010 Dodd-Frank Act to shed light on the growing income gap between executives and workers. Opponents say it’s only meant to embarrass executives and won’t be useful to investors. One critic called it an example of bigotry against the successful.”

And: The disclosures will provide a first-ever glimpse into how thousands of U.S. companies compensate their workers, plus a more accurate sense than ever before of the CEO-to-worker pay gap.

A year ago, Alex Edmans writing in The Harvard Business Review said “…the numbers are striking…the idea is that a high pay ratio is unfair…I strongly believe that executive pay should be reformed…[but] the pay ratio is a misleading statistic because CEOs and workers operate in very different markets…”

His commentary is at:

https://hbr.org/2017/02/why-we-need-to-stop-obsessing-over-ceo-pay-ratios
(He is a professor of finance at London Business School.)

Our new “G&A Institute’s To the Point!” management brief platform has background on the CEO-Worker Pay Ratio, published for guidance in September 2017 as the SEC published its guidance:

IT’S H-E-R-E NOW: SEC Guidance on CEO-Employee Pay Rule Clarified in Interpretive Guidance. Your Company Should Be Prepared for First Quarter 2018 Disclosures and Beyond!

The information is at:
https://ga-institute.com/to-the-point/its-h-e-r-e-now-sec-guidance-on-ceo-employee-pay-rule-clarified-in-interpretive-guidance-your-company-should-be-prepared-for-first-quarter-2018-disclosures-and-beyond/

I have a chapter in my book (“Trends Converging!) about the pay rule (Chapter 9) – the entire book is available for you with my compliments at:
https://www.ga-institute.com/research-reports/trends-converging-a-2016-look-ahead-of-the-curve.html

We’ll continue to bring you news of the CEO-Worker Pay Ratio corporate disclosures in 1Q 2018– company announcements and the public response to same.

Access RobecoSAM’s Leading Practice & Benchmarking Database For The Day @ DJSI – How Insights Inspire Action

Each attendee will have free access to RobecoSAM’s Benchmarking & Leading Practices Database for the day.Access to these databases normally cost 4’990 EUR and 2’500 EUR respectively.

The aim of this workshop is to increase the participants’ knowledge about the importance of and methodology behind the Dow Jones Sustainability Indices (DJSI) and the RobecoSAM Corporate Sustainability Assessment (CSA).

Representatives from RobecoSAM will lead a workshop session on how to utilize these important resources which are summarized below.

RobecoSAM Benchmarking Database (BDB)
A searchable database to benchmark your company against your peers on the criteria level of questions in the RobecoSAM CSA. Includes the ability to filter region, competitors, and do trend analysis including graphical representation of your company score against your competitors. You’ll be able to see the rankings of other companies assessed in your industry as well. With this tool you’ll have the ability to conduct detailed benchmarking analysis to answer internal or external queries about your sustainability performance.More details on the RobecoSAM Benchmarking Database (BDB) can be found here. RobecoSAM

Leading Practice Database (LPD) 
A searchable database of leading companies’ practices in relation to the questions asked in RobecoSAM’s Corporate Sustainability Assessment. The Leading Practice Database puts hundreds of real industry examples and quantitative analyses at your fingertips. Company examples are sourced from over 50 different industries and cover most of the questions included in RobecoSAM’s Corporate Sustainability Assessment (CSA). The database also includes thousands of industry-specific statistical analysis of individual RobecoSAM CSA results for your particular industry. These examples will inform you about the conditions required in a certain CSA question to score 90 or above, and the percentage of companies in your industry meeting those conditions in a given assessment year. This analysis is provided on a global level.
More details on the Leading Practice Database (LDP) can be found here.

Join us on April 6, 2018 from 8:30AM – 2:00 PM EST  @ Baruch College/CUNY NYC:
DJSI – HOW INSIGHTS INSPIRE ACTION
Leveraging the Value of the Corporate Sustainability Assessment 
Presented by Governance & Accountability Institute in collaboration with RobecoSAM

EARLY BIRD RATE: $599 (Available until February 23rd. Full Price: $749)
Registrations will be open until April 5, 2018.

CLICK HERE TO VIEW AGENDA!

For information and to register, click here.

FOR QUESTIONS, contact Louis D. Coppola, Executive Vice President & Co-Founder, Governance & Accountability Institute, Inc. at Tel 646.430.8230 ext 14 or email lcoppola@ga-institute.com.

About Governance & Accountability Institute, Inc. (www.ga-institute.com
Governance & Accountability Institute is a New York City-based sustainability research, consulting and educational services company working with corporate sector and investment community clients. Typical engagements include preparation of sustainability, CSR and citizenship reports; peer benchmarking on ESG issues and reporting; customized ESG research (environmental, social and governance performance); strategic materiality analysis; sustainable investor relations; corporate communications around sustainability; and assistance with stakeholder engagements. The company is the Data Partner for the Global Reporting Initiative (GRI) for the USA, UK and the Republic of Ireland.

About RobecoSAM (www.robecosam.com
Founded in 1995, RobecoSAM is an investment specialist focused exclusively on Sustainability Investing. It offers asset management, indices, impact analysis and investment, sustainability assessments, and benchmarking services. Together with S&P Dow Jones Indices, RobecoSAM publishes the globally recognized Dow Jones Sustainability Indices (DJSI) as well as the S&P ESG Factor Weighted Index Series, the first index family to treat ESG as a standalone performance factor using the RobecoSAM Smart ESG methodology. As of June 30, 2017, RobecoSAM had client assets under management, advice and/or license of approximately USD 20 billion.

Important legal information: The details given on these pages do not constitute an offer. They are given for information purposes only. No liability is assumed for the correctness and accuracy of the details given. The securities identified and described may or may not be purchased, sold or recommended for advisory clients. It should not be assumed that an investment in these securities was or will be profitable. Copyright© 2018 RobecoSAM – all rights reserved.

Proof of Concept for Sustainable Investing: The Influential Barron’s Names the Inaugural “The Top 100 Sustainable Companies — Big Corporations With The Best ESG Policies Have Been Beating the Stock Market.”

By Hank Boerner – Chairman and Chief Strategist, G&A Institute

Barron’s 100 Most Sustainable Companies

Barron’s is one of the most influential of investor-focused publications (in print and digital format) and a few months ago (in October), the editors published the first of an ongoing series of articles that will focus on ESG performance and sustainable investing, initially making these points:

  • Barron’s plans to cover this burgeoning style of investing on a more regular basis. A lot of possible content that was developed was left on the cutting room floor, the editors note.
  • Says Barron’s: “We are only in Version 1.0 of sustainable investing. 2.0 is where ESG is not a separate category but a natural part of active management.”
  • And:  “Given the corporate scandals of recent days (Wells Fargo, Equifax, Chipotle, Volkswagen, Valeant Pharmaceuticals), it is clear that focus on companies with good ESG policies is the pathway to greater returns for investors!”

The current issue of Barron’s (Feb 5, 2018) has a feature article and comprehensive charting with this cover description:

The Top 100 Sustainable Companies – Big Corporations With the Best ESG Policies Have Been Beating the Market.”

Think of this as proof of concept: The S&P 500® Index Companies returned 22% for the year 2017 and the Barron’s Top 100 Sustainable Companies average return was 29%.

The 100 U.S. companies were ranked in five categories considering 300 performance indicators.  Barron’s asked Calvert Research and Management, a unit of Eaton Vance, to develop the list of the Top 100 from the universe of 1,000 largest publicly-held companies by market value, all headquartered in the United States.

Calvert looked at the 300 performance indicators that were provided by three key data and analytic providers that serve a broad base of institutional investors:

  • Sustainalytics,
  • Institutional Shareholder Services (ISS)
  • and Thomson Reuters ASSET4 unit.

Five umbrella categories were considered:

  • Shareholders
  • Employees
  • Customers
  • Planet
  • Community

There were items considered in the “shareholders” category, like accounting policies and board structure; employee workplace diversity and labor relations; customer, business ethics and product safety; planet; community; GHG emissions; human rights and supply chain.

We can say here that “good governance” (the “G” in ESG) is now much more broadly defined by shareholders and includes the “S” and “E” performance indicators (and management thereof), not the formerly-narrow definitions of governance. Senior managers and board, take notice.

Every company was ranked from 1-to-100, including even those firms manufacturing weapons (these firms are usually excluded from other indexes and best-of lists, and a number of third party recognitions).

Materiality is key: the analysts adjusted the weighting of each category for how material it was for each industry. (Example: “planet” is more material for chip makers using water in manufacturing, vs. water for banking institutions – each company is weighted this way.)

The Top 100 list has each company’s weighted score and other information and is organized by sector and categories; the complete list and information about the methodology is found at Barron’s.com.

The Top 5 Companies overall were:

  • Cisco Systems (CSCO)
  • salesforce.com (CRM)
  • Best Buy (BBY)
  • Intuit (INTU)
  • HP (HPQ)

The 100 roster is organized in categories:

  • The Most Sustainable Consumer Discretionary Companies (Best Buy is at #1)
  • The Most Sustainable Financials (Northern Trust is #1) – Barron’s notes that there are few banks in the Top 100. Exceptions: PNC Financial Services Group and State Street.
  • The Most Sustainable Industrials (Oshkosh is ranked #1)
  • The Most Sustainable Tech Outfits (Cisco is at the top)

Familiar companies names in the roster include Adobe Systems, Colgate-Palmolive, PepsiCo, Deer, UPS, Target, Kellogg, Apple, and Henry Schein.

Singled out for their perspectives to be shared in the Barron’s feature commenting on the ESG trends: John Wilson, Cornerstone Capital; John Streur, Calvert; Calvet Analyst Chris Madden; Paul Smith, CEO of CFA Institute; Jon Hale, Head of Sustainability Research at Morningstar.

Calvert CEO John Streur noted: “This list gives people insight into companies addressing future risks and into the quality of management.”

Top-ranked Cisco is an example of quality of management and management of risk: The company reduced Scope 1 and 2 GHG emissions by 41% since 2007 and gets 80% of its electricity from renewable sources.

This is a feature article by Leslie P. Norton, along with a chart of the Top 100 Companies.

She writes: “…Barron’s offers our first ranking of the most sustainable companies in the U.S. We have always aimed to provide information about what keenly interests investors – and what affects investment risk and performance…” And…”what began as an expression of values (“SRI”) is finding wider currency as good corporate practices…”

The complete list of the top companies is at Barron’s com. (The issue is dated February 5th, 2018)  You will need a password (for subscribers) to access the text and accompanying chart.

For in-depth information: We prepared a comprehensive management brief in October 2017 on Barron’s sustainable coverage for our “G&A Institute’s To the Point!” web platform: https://ga-institute.com/to-the-point/proof-of-concept-for-sustainable-investing-barrons-weighs-in-with-inaugural-list-of-top-100-sustainable-companies/

LESS THAN 10 DAYS LEFT! REGISTER & RESERVE YOUR SEAT AT DEMYSTIFYING THE CSA & DJSI

LESS THAN 2 WEEKS LEFT!
REGISTER & RESERVE YOUR SEAT AT DEMYSTIFYING THE CSA & DJSI
Focus on Assessment Questions for Human Rights, Human Capital & Supply Chain

A Practitioner Workshop on Tuesday, October 24, 2017
Presented By Governance & Accountability Institute
in collaboration with RobecoSAM

The aim of this workshop is to increase the participants’ knowledge about the methodology behind the Dow Jones Sustainability Indices (DJSI) and the RobecoSAM Corporate Sustainability Assessment (CSA). In this session but, special focus will be on selected criteria including Human Rights, Supply Chain, and Human Capital.

A workshop session will also be included on how institutional investors are utilizing data from the CSA and ESG data in their investment decision-making.

RobecoSAM and Governance & Accountability Institute expert representatives will contribute to the meeting overall and in particular present content (including analysis and slide decks) that address each of the criterion.

Representatives from CSA-responding corporations that are high scorers in the respective CSA criterion will respond and share their perspective and experience in crafting responses to the CSA. Participants can expect to take away a deeper understanding of:

  • The DJSI 2017 – results & learnings.
  • Effective approaches in assessing established and emerging sustainability topics in the CSA.
  • Rationale, the business case, performance, and results from last year’s assessment, and learn more about major challenges for companies, especially in the CSA Criteria of Human Rights, Human Capital, and Supply Chain.
  • How institutional investors / fiduciaries are utilizing ESG data.

AGENDA

WELCOME OF THE DAY 
* Hank Boerner, Co-Founder & Chairman, Governance & Accountability Institute
* Louis Coppola, Co-Founder & Executive Vice President, Governance & Accountability Institute
* Robert Dornau, Director, Senior Manager Sustainability Services, RobecoSAM

WORKSHOP 1: HUMAN RIGHTS
with Top Scoring Corporate Representative:
Ariel Meyerstein, Senior Vice President, Corporate Sustainability, Citi

* Robert Dornau, Director, Senior Manager Sustainability Services, RobecoSAM
* Moderator: Louis Coppola, Co-Founder & Executive Vice President, Governance & Accountability Institute

WORKSHOP 2: HUMAN CAPITAL
with Top Scoring Corporate Representative:
Tina M. Berg, Sustainability Specialist, 3M Corporate Social Responsibility 

* Robert Dornau, Director, Senior Manager Sustainability Services, RobecoSAM
* Moderator:
 Hank Boerner, Co-Founder & Chairman, Governance & Accountability Institute

Networking Lunch

WORKSHOP 3: SUPPLY CHAIN
with Top Scoring Corporate Representative:
Jocelyn Cascio, Supply Chain Sustainability Senior Manager at Intel Corporation 

* Robert Dornau, Director, Senior Manager Sustainability Services, RobecoSAM
* Moderator: Louis Coppola, Co-Founder & Executive Vice President, Governance & Accountability Institute & Board Member of Global Sourcing Council (GSC)

WORKSHOP 4: ESG DATA FROM AN INVESTOR PERSPECTIVE
with Hideki Suzuki, Senior Governance Data Analyst, Bloomberg LP

DJSI 2018 OUTLOOK & CLOSING REMARKS 
* Robert Dornau, Director, Senior Manager Sustainability Services, RobecoSAM
* Hank Boerner, Co-Founder & Chairman, Governance & Accountability Institute
* Louis Coppola, Co-Founder & Executive Vice President, Governance & Accountability Institute

DETAILS
Tuesday, October 24, 2017
8:45 am – 4:00 pm
Baruch College/ CUNY
, Newman Vertical Campus
55 Lexington Avenue, New York, NY 10010

For information and to register click here.
Registrations will be open until October 22nd, 2017.

For questions, contact Louis D. Coppola, Executive Vice President & Co-Founder, Governance & Accountability Institute, Inc. at Tel 646.430.8230 ext 14 or email lcoppola@ga-institute.com.

SEC Proposes Important Amendments to Corporate Disclosure & Reporting – Changes Are in the Wind — But Corporate ESG Disclosure Is Not Addressed in the SEC Proposals …

October 12 2017 – by Hank Boerner – Chair, G&A Institute

On October 11, 2017 important news was coming from the Securities Exchange Commission (in Washington DC) for corporate leaders and investment professionals: a comprehensive package of proposed changes (amendments) to existing rules for corporate disclosure and reporting was released for public examination and comment.

There are more than 250 pages of proposed changes and adjustments released for your reading (the document will be published now in the Federal Register for broad communication to stakeholders).

You’ll remember the April 2016 activities as SEC released a 200-plus page Concept Release that addressed a range of issues that could result in revamping the overarching parts of Regulation S-K and parts of Regulation Fair Disclosure (“Reg FD“) and other corporate disclosures required by Federal statutes.

We told you about this in our post of May 13, 2016.
Link: http://ga-institute.com/Sustainability-Update/tag/sec-concept-release/

We said then: Maybe…U.S. Companies will be required…or strongly advised…to disclose ESG Data and related business information…

There were great hopes raised when the Commission in circulating the Concept Release document devoted more than a dozen pages to discussion about ESG, sustainable investing, the possibility of “guidance” or perhaps amending rules to meet investors’ expectations that public companies would begin, expand, improve on, ESG disclosure.

Numerous investor interests provided comments to the SEC in support of the possibilities raised by SEC in the dozen pages of the Concept Release devoted to ESG et al.

The US SIF — the Forum for Sustainable and Responsible Investing, a very influential trade association of asset owners and managers — provided important input, as did the CFA Institute (the U.S.-based, global certification organization for financial analysts and portfolio managers worldwide).

Disclosure of material ESG issues was a key concern of the numerous responders in the public comment period.

This week’s development: The SEC Commission proposed amendments to existing regulations that are part of the “Modernization and Simplification of Regulation S-K,” citing a different package of legislation. (The FAST Act Modernization, which in part will the sponsors said will attempt to “prune the regulatory orchard” — this is part of the Fixing America’s Surface Transportation Act or “FAST”.)

The Commission referred to the proposals as an important step “…to modernize and simplify disclosure requirements for public companies, investment advisors and mutual fund (investment) companies under the FAST Act…”

This, said recently-appointed SEC Chair Jay Clayton, “…is the most effective way to update SEC rules, simplify forms and utilize technology to make disclosure more accessible…”

The proposed amendments were characterized as part of the overall, long-term review of the SEC’s disclosure system. Thus, the SEC said the proposed amendments reflect “perspectives developed during the staff’s broader review…including public input on the prior Concept Release.

The details are available for you in a new 253-page document, at: https://www.sec.gov/rules/proposed/2017/33-10425.pdf

You have 60 days of open comment period ahead during which to express your views on the proposals.

The proposed amendments mostly address corporate governance (G”) issues that if adopted would:

• Change such items as Description of Property**; the MD&A; Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act; Outside Cover Page of the Prospectus.

• Revise rules and forms to update, streamline and improve the SEC disclosure framework by eliminating risk factor examples listed in the disclosure requirement and revising the description of “the property requirement” to emphasize the materiality threshold**”.

Note that while “property” is usually a facility, this does not always apply to the service sectors.

• Update rules as needed to reflect changes since the rules were first adopted or last amended. (Including, “corporate governance” items, such as for Board Auditing, Compensation Committee operations.)

• Simplify the overall disclosure process, including treatment of confidential information; also, changes would be made to the MD&A to allow for “flexibility in discussing historical periods”. (The discussion on confidential info runs for pages – important to read for corporate managers involved in disclosure.)

• Treatment of subsidiaries.

• Incorporate technology to improve access to information requiring data tagging (XBRL) for items on the cover page and use of hyperlinks (HTML) by reference and in the EDGAR system.

Again – the public now has 60 days to submit comments on the proposed amendments (to such statutory authority as the Securities Act of 1933; Securities Exchange Act of 1934; Investment Company Act of 1940; and, regulations under these landmark securities protection laws of the land).

There are numerous sections within the proposed amendment document where the Commission is inviting public comment. To submit your comments, see: http://www.sec.gov/rules/proposed.shtml — file#S7-08-17

Disappointing News: There is no mention that we could find in the proposal document that addressed the many comments that were directed to the SEC staff in response to the earlier Concept Release by sustainable & responsible investor interests. And, in many investor conversations with SEC staff that acknowledged the growing importance of disclosure regarding corporate sustainability and ESG performance.

No mention of: Climate Change. ESG. Responsible Investment.

This is very troubling — no doubt members of the investment community and corporate leaders well along on their sustainability journey will be providing their perspectives to SEC — and the media, and elected officials — on this important oversight.

SEC guidance for corporate reporters regarding their ESG, sustainability, responsibility, citizenship, etc disclosures and reporting activities would be very helpful – right?  Of course, we are in a new political environment now, and perhaps that is helping to shape the agenda at the Commission as “reforms” are drafted and distributed for public consumption.

There is much more news to come when the response to the announcement begins. Stay Tuned!

P.S. – if you/your organization responds to the draft proposals, please do let G&A know so we can publicize your perspectives.

DJSI Results Announced — Are You In / Out? Attend Our Workshop in Collaboration with RobecoSAM in New York City on October 24th

Many corporations that endeavor to be sustainable become a bit nervous as we pass Labor Day in the USA.  The rebalancing of the Dow Jones Sustainability Indexes is traditionally announced at that time.  Is my company in?  Out?  Increasingly, CEOs and other C-suite execs and board members (as well as numerous managers) are holding “membership” in the Dow Jones Sustainability Indices in very high regard.

On September 7, 2017, the results were announced in Switzerland by RobecoSAM (the creators and managers of the DJSI) and S&P Dow Jones Indices (owners of the intellectual property and one of the world’s leading index providers).

Among the many new companies added to the Indices, three were announced in the official press release, Samsung Electronics, Ltd; BAT (British American Tobacco plc); and, ASML Holding NV.  And among the many unfortunate companies dropped from the index, the three mentioned in the release included Enbridge Inc; Reckitt Benckiser Group plc; and, Rio Tinto plc.

The DJSI were launched in 1999, and over time became the “gold standard” for corporate sustainability indexes.

Every year select corporations are invited to respond the company’s Corporate Sustainability Assessment (“CSA”) — a rigorous, rules-based online process for company managements’ response efforts. There are about 600 data points per company that is organized into one overall score. Certain criterion (topic sub-sections of the CSA) are added for specific sectors based on materiality, and each sector has different scoring weights applied to the various criterion based on how material they are to the sector.  (Note that the G&A Institute team assists client organizations in their response efforts each year.)

This year, the CSA assessed “Policy Influence” for the first time — assessing public companies’ lobbying activities.  And the Impact Measurement & Valuation Criteria were expanded to just about all industries. RobecoSAM sees Policy influence as a material issue for investors, especially in such countries as those where the revenues of public companies may exceed the GDP of that country.

RobecoSAM acknowledges that companies are aware of the need to “understand environmental and social profits and losses, but less than 10% have a viable valuation approach in place to provide detailed insights into potential E and S financial impacts.”

Top Stories This Week…

How Do We Measure Sustainability?
(Friday – September 08, 2017)
Source: EWN – Globally, there has been an increase in demand for higher transparency on environmental, social and governance issues.


A special all-day workshop is being offered to corporate managers, presented by G&A Institute in collaboration with RobecoSAM in New York City on Tuesday, October 24th at Baruch College/CUNY:

Demystifying The Corporate Sustainability Assessment (CSA) & The Dow Jones Sustainability Indices (DJSI)
Focused on Assessment Questions for
Human Rights, Human Capital & Supply Chain

Click here for more information and to register.

Highlights of the Workshop:  The aim of this workshop is to increase the participants’ knowledge and obtain advice on the Dow Jones Sustainability Indices (DJSI) and the RobecoSAM Corporate Sustainability Assessment (CSA) — in this session, specifically on selected criteria including Human Rights, Supply Chain, and Human Capital.

Representatives from high-scoring CSA-responding companies including 3M and Citi will share their perspectives and experience in crafting responses to the CSA.

Participants will also learn how institutional investors are utilizing data from the CSA and ESG data into their investment decision-making with a special guest from Bloomberg LLC.

Participants can expect to take away a deeper understanding of:

  • The DJSI 2017 – results, lessons, outlook.
  • Effective approaches to assessing established and emerging sustainability topics in the CSA.
  • Rationale, the business case, performance, and results from last year’s assessment, and learn more about major challenges for companies, especially in the CSA Criteria of Human Rights, Human Capital, and Supply Chain.
  • How institutional investors/fiduciaries are utilizing ESG data.

Early bird pricing is open through September 30th.
Get more details and register at: http://bit.ly/CSAtrain