Broadening Activism Among Institutional Investor Classes on ESG Issues – Here to Stay, Says Proxy Advisor CEO

“Operating under the radar” — that is, various categories of institutional investors getting active in the “investor activist” game?  Bruce Goldfarb, CEO of Okapi Partners, describes a sea change that he sees that is underway, the trend in how large institutions are approaching in the [investor] push for corporate change.  The lens is the annual corporate proxy season and the many campaigns therein, including the 2017 campaign.  Okapi is one of the influential proxy advisors for both investor and companies, working on some 48 campaigns during 2017.

What did the firm’s leader see as patterns?  Well, for starters, large mutual fund advisories and ETF complexes (like Vanguard, Fidelity, BlackRock, State Street) — these organizations with many trillions’ of dollars in corporate holdings in their portfolios, “…have become increasingly intent on holding public company boards and management teams accountable in higher ESG standards,” CEO Goldfarb notes in our Top Story (published on the digital Forbes Investing platform).

As many of us well know, the first iteration of ESG was about the “G” — for several decades, the focus was on corporate governance issues.  (Such as: investors pushing for separation of Chair and CEO, the often described example of a popular campaign in the G space).  Over time, the emphasis on environmental and social issues (“E” and “S”) broadened the approach to the familiar ESG measurements because the E and S issues are tied to share performance and confidence (or lack of) in management.

The CEO in the interview points out that a climate change proposal at ExxonMobil recently was passed by a wide margin (investors supported the demand that the company publish an annual assessment of the impact of global warming policies) while a decade ago a push by investors in proxy campaigning to separate chair and CEO positions and a few environmental proposals failed by a very large margin.  Things are a-changin’ in the proxy arena.

In 2017, there have been (so far) 430 resolutions filed that address “S” and “E” issues, compared to 370 a year earlier.  Investors, says CEO Goldfarb, see the connection between ESG policies and stock performance more clearly now.

In our conversations with corporate managers (at all size enterprises) it is clear that the managers want to press the Investing Case upward to their bosses in the C-suite and board room.  Why should we make the investment in a sustainability effort, the question often goes, and the answer is that among other things, corporate performance and a scorecard of sorts on top management has a proxy, too — that is, the ESG performance of the enterprise!

You’ll find more from perspectives shared by the Okapi Partners CEO in the Forbes interview by staffer Antoine Gara in our Top Story this week.

Top Stories This Week…

An Insider Explains Why Wall Street’s Big Money Focus On Sustainability Is Here To Stay
(Friday – July 28, 2017)
Source: Forbes – When a hedge fund launches a major activist campaign calling for changes at companies here and in overseas markets it’s real news.

RESEARCH RESULTS: Using The GRI Sustainability Reporting Framework Improves The Quality of ESG Disclosures – Joint Research From G&A Institute and Baruch College Shows

(July 18, 2017 – New York, NY) — Governance & Accountability Institute, Inc. is the data partner for the Global Reporting Initiative (GRI) in the United States, United Kingdom, and The Republic of Ireland. In this role the Institute monitors, collects and analyzes every sustainability report published in these three countries. The results of this pro-bono work help to feed the GRI’s “Sustainability Disclosure Database,” the largest sustainability database in the world, with 41,734 sustainability reports as of June 30th, 2017.

In addition to this important work, G&A Institute has analyzed the corporate sustainability (and related titles) reporting of the S&P 500® universe of companies for six years in a row, first releasing its benchmark studies on the 2010 reporting year.

In the first year of the study, for 2010 reporting, G&A Institute determined that 80 percent of the leading large-cap companies of the United States of America included in the index were laggards, and not publishing sustainability reports. Generally speaking, this result clearly demonstrated that U.S. companies were lagging many of their corporate peers in Europe where the rates of reporting on Environmental, Social and Corporate Governance (ESG) issues were much higher and reporting is increasingly mandated.

Since then, there has been a dramatic increase in the S&P 500 universe companies, with 53% of the S&P 500 companies reporting in 2012; 72% reporting in 2013; 75% reporting in 2014; 81% in 2015, and in the most recent flash report issued by G&A Institute 82% of the S&P 500 were reporting in the 2016 calendar year. See more here: http://www.ga-institute.com/press-releases/article/flash-report-82-of-the-sp-500-companies-published-corporate-sustainability-reports-in-2016.html.

The dramatic rise in corporate reporting on sustainability is holding steady, with an increasing number of companies disclosing their strategy and performance on ESG metrics.

But Now That Most Companies Are Publishing Sustainability Reports the Question Arises: What is the Quality of the Content of These Reports?

To explore the answers, G&A teamed with The CSR-Sustainability Monitor® (CSR-S Monitor) research team at the Weissman Center for International Business, Baruch College/CUNY, to combine their partners’ “Big Data” sets to extract deeper intelligence on the subject.

Baruch’s CSR-S Monitor uses a content analysis approach to score CSR / Sustainability reports published by the world’s largest companies as identified in Fortune 500 and Global 500 rankings. The CSR-S Monitor scoring methodology categorizes the content of each report into 11 components called “Contextual Elements,” which cover the most commonly reported sustainability topics:  Chair’s / Executive Message, Environment, Philanthropy & Community Involvement, External Stakeholder Engagement, Supply Chain, Labor Relations, Governance, Anti-Corruption, Human Rights, Codes of Conduct, and Integrity Assurance.

More info on these 11 contextual elements can be seen online at: http://www.csrsmonitor.org/methodology/contextual_elements.pdf
(Note that only disclosure in the form of a standalone or web-based CSR report or Integrated Annual Report is considered for the purpose of scoring on the CSR-S Monitor.)

The Question Asked on The Combined “Big Data” Sets Is: 
Does Reporting Using The GRI Sustainability Reporting Framework Result in Higher Quality Reports?

The partners set out an ambitious study to answer this question through examining the quality of information and degree of verification provided in the reports that were identified as utilizing the GRI reporting frameworks, and the ones that did not.

Question Posed
Is there a difference between the world’s leading companies following the GRI guidelines and those not doing so? Short answer: Yes! CSR-S Monitor found that a supermajority of the large-cap companies do follow the Global Reporting Initiative (GRI) guidelines, and following the GRI guidelines makes a big difference in most categories.

Highlights of the Analysis
The partners’ data sets matched up on 572 companies which were included as the Universe for this study. The data are taken strictly from reports published any time during the calendar year 2014. The CSR-S Monitor analysts scored companies on their disclosure on the 11 contextual elements, based on information quality and degree of verification. The G&A data were used to separate the scored reports into two buckets, those that utilized the GRI framework, and those that did not. There were a total of 481 (or 84%) companies publishing using the GRI framework, and 91 (16%) companies not using the GRI framework.

Results of Analysis 
Companies using the GRI framework consistently achieved average contextual element scores higher than the companies not using GRI for their reporting (scores are from 0-100 with 100 being the best).

  • Overall, the score was 45.7% for GRI reporter, vs. 29.6% for non-GRI;
  • For the Environment element, GRI reporters scored 64.9% vs. 51.0% for non-GRI;
  • For Labor Relations, GRI reporters scored 55.8% vs. 36.7% for non-GRI;
  • For Supply Chain, GRI reporters scored 46.6% vs. 28.2% for non-GRI;
  • For Anti-Corruption, GRI reporters scored 26.4% vs 10.4% for non-GRI;
  • For Integrity Assurance, GRI reporters scored 31.0% vs. 13.3% for non-GRI;
  • The largest differential was for Human Rights, with GRI reporters scoring 45.0% vs. 15.0% for non-GRI reporters.

Mert Demir, PhD, Director of Research at Weissman Center, commented on the CSR-S Monitor analysis:  “CSR-Sustainability Monitor scores reflect the breadth, depth, and degree of external/independent verification of the information in corporate sustainability reports, regardless of the firm’s underlying ESG performance. While sustainability reporting has become more mainstream over time, these reports still show limited standardization and considerable variation in content and quality, preventing effective comparisons of their information across time as well as among peers. Though stakeholders often find these reports core to their evaluation of a company, these issues make using them effectively challenging.

“The Monitor’s scores indicate these concerns have mostly been addressed with the adoption of a reporting framework such as GRI’s. GRI-compliant reports achieve significantly higher quality scores across all main domains of sustainability reporting. As companies pursue sustainability objectives, they increasingly face the necessity to address growing stakeholder concern and expectations regarding comprehensive, detailed, and material ESG information to complement financial information they believe to be insufficient to assess the big picture alone. And in this respect, following a reporting framework—GRI in particular—seems to make a big difference.”

Louis D. Coppola, MBA, Executive VP of G&A Institute and architect of the G&A Institute’s various research efforts including the S&P 500 studies, commented: “As we continue our in-depth analysis of corporate sustainability and responsibility disclosure and reporting, it is abundantly clear, year-after-year, that companies following the comprehensive GRI framework enjoy higher scores assigned by independent third party providers on a range of ESG factors important to stakeholders.

“The simple fact is that standardized sustainability reporting helps companies and its stakeholders, including investors to better utilize the information disclosed for decision making. Companies not following the GRI framework, by far the most commonly used sustainability reporting framework in the world, are consistently out-classed by their GRI reporting peers.

“By July 2018, companies reporting utilizing GRI will be required to utilize the new GRI Standards that were released in October 2016, to replace the fourth generation GRI G4. The GRI Standards are the first global standards for sustainability reporting and feature a modular, interrelated structure allowing for more flexibility in updating and in usage. The GRI Standards represent the global best practice for reporting on a range of economic, environmental and social impacts.”

# # #

About CSR-Sustainability Monitor Report
The organization reports on the quality of CSR / Sustainability reports from the world’s largest companies. Using a content analysis-based system to score corporate reports; there are 11 contextual elements scored, based on scope of coverage, specificity of detail, and degree of verification. Companies in the Fortune 500 and Fortune Global 500 Indices are included in the analysis.

About The Weissman Center
Founded in 1994, Baruch College’s Weissman Center for International Business is designated to enable Baruch College/CUNY to respond to the global economy with programs appropriate to a pre-eminent school of business. The Center created the CSR-S Monitor as a tool for analyzing the CSR reporting by the largest U.S. and global companies; in the screening process, analysts measure the degree to which the reporting company provides integrity assurance as to accuracy and completeness of information disclosed.

About Governance & Accountability Institute, Inc.
Founded in 2006, G&A Institute is a sustainability consulting firm headquartered in New York City, advising corporations in executing winning strategies that maximize return on investment at every step of their sustainability journey. The G&A consulting team helps corporate and investment community clients recognize, understand and address sustainability issues to address stakeholder and shareholder concerns.

G&A Institute is the Data Partner for the Global Reporting Initiative (GRI) in the USA, UK and Republic of Ireland. A G&A team of six or more perform this pro bono work on behalf of GRI. Over the past six-plus years, G&A has analyzed more than 5,000 sustainability reports in this role and databased more than 100 important data points for each of the [thousands of] reports.

G&A’s sustainability-focused consulting and advisory services fall into three main buckets: Sustainability/ESG Consulting; Communications and Recognitions, and Investor Relations. The resources available within each bucket include strategy-setting; sustainability/CSR reporting assistance; materiality assessments; stakeholder engagement; ESG benchmarking; enhancing investor relations ESG programs; investor engagement; investor ESG data review; sustainability communications; manager coaching; team building; training; advice on third party awards, recognitions, and index inclusions; ESG issues monitoring and customized research.

About *S&P 500® Index
According to S&P Dow Jones Indices / McGraw Hill Financial: “The S&P 500® is widely regarded as the best single gauge of large-cap US equities. There is over US$7 trillion benchmarked to the index, with index assets comprising approximately US$1.9 trillion of this total. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.” The S&P 500 is a trademarked® property of S&P Dow Jones Indices, McGraw Hill Financial. Ticker: SPX

About Fortune Indices
According to Fortune.com: “The Fortune Global 500 is our annual ranking of the largest 500 corporations worldwide as measured by total revenue, whereas the Fortune 500 is exclusively U.S. corporations… Companies are ranked by total revenues for their respective fiscal years.” Copyright 2017 Time Inc. FORTUNE® and the FORTUNE Database names are trademarks of Time Inc. All rights reserved.

For more information, contact Governance & Accountability Institute:
Louis D. Coppola
Executive Vice President & CoFounder
Tel: 646.430.8230 x14
Email: lcoppola@ga-institute.com

U.S. / Global Cities Showing the Way on Climate Change Solutions

Sustainability — Forward Momentum!

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

U.S. / Global Cities Are Showing the Way on Climate Change Solutions — consider:  more than half of the world’s population (now at 7 billion) now live in cities. Many cities are vulnerable to the effects of climate change — rising seas; drought; severe storms; heat waves; winter blizzards…vicious storms of all types…and more.

City Fathers and Mothers are awake to the threats — and doing something about climate change!

While at the Federal level the public sector of the United States of America has abandoned the field to other nations to now lead on addressing climate change challenges, at the city/municipality level, there is a lot going on that is positive and encouraging.

Here’s a brief collection of recent events that spell out o-p-p-o-r-t-u-n-i-t-y at the domestic and global urban level.

The U.S. Conference of Mayors
At the recent U.S. Conference of Mayors meeting in Miami Beach (the 85th annual for the association), climate change issues were high on the agenda. Of course — many U.S. cities are at water level, on oceans-rivers-bays. New York; Miami; Baltimore; Philadelphia: Boston; San Francisco; Chicago; Cleveland; New Orleans; St Louis — need we go on?

At the annual conference there were plenaries, workshops, committee meetings, task force meetings, and more. The headlines coming out of the Conference of Mayors:

A survey of the members found many U.S. mayors are taking action on climate protection and planning even more steps in the future.

City governments are focusing on:

  • Purchase of renewable energy electricity (69% of respondents already generate or purchase and 22% are considering doing so);
  • utilization of low-carbon transport (63% buy green vehicles for municipal fleets; 30% are considering; this includes hybrids, electric, natural gas, biodiesel);
  • striving for greater energy efficiency, especially for new municipal buildings 71%; 65% for existing buildings — this includes new policies put in place;
  • the association has teamed with the Center for Climate and Energy Solutions (C2ES)**, to promote renew these programmatic approaches; this creates a framework for mayor and business leaders to collaborate to develop approaches to reduce carbon emissions, speed deployment of new technology, implement sustainable development strategies, and respond to the growing impacts of climate change.

Survey respondents were from 66 cities with populations ranging from 8.5 million to 21,000 across 30 of the U.S. states. These cities invest more than US$1.2 billion annually in electricity — a significant buying power to help create the changes needed in the municipal electricity market.

Collaboration — the survey demonstrated that cities are working with each other (90%) and with the private sector (87%) to accelerate action on climate change issues. This is important when considering the recent White House abandonment of the Paris Agreement.

Opportunity Spelled Out:

  • Half of responding cities are incentivizing energy efficiency in both new and existing commercial and residential buildings. There is significant room for growth here. And lots of opportunity for public-private sector collaboration.
  • Less than half of the cities have policies / programs to help businesses and their citizens choose renewable energy — more room for growth and opportunities for partnering.
  • 66% of the cities responding have put in place public charging stations; 36% are in the process of doing so with private sector partners (for electric vehicle charging).

Says Conference of Mayors CEO Tom Cochran: “The nation’s mayors are poised to take an even greater leadership role in fighting climate change and protecting cities from its negative impacts. Working together with the business community, we can achieve deeper results more quickly and broadly.”

While much progress is being made, the mayors collectively are striving to do more.

Notes Santa Fe Mayor Javier Gonzales, Alliance Co-Chair : “We need to create a baseline so we can measure our ongoing progress. Sustainability is a smart strategy for the future, and cities and companies need to learn from one another.”

One of the positive actions taken at the conference was adoption of a resolution — “Supporting a Cities-Driven Plan to Reverse Climate Change” — which notes that cities comprise 91% of the U.S. GDP, placing mayors at the center of marrying environmental protection with economic growth; and, it calls on the Trump Administration and the U.S. Congress to support the fight against climate change by fully committing to the Paris Climate Accord; the Obama Clean Power Plan; the Clean Energy Incentive Program; and other efforts to provide U.S. cities with the tools needed to combat climate change. (You can read the full text at: http://legacy.usmayors.org/resolutions/85th_Conference/proposedcommittee.asp?committee=Environment

# # #

There’s much more encouraging news from the municipal government level.

The Compact of Mayors (“C40”) is the world’s largest cooperative effort among mayors and city leadership working together to reduce GhG emissions and address climate risk in the world’s cities. The effort was launched by the United Nations General Secretary in June 2016. And in the year since:

652 cities have joined the effort;
— representing almost 500 million people residing in the urban centers;
— which is about 7% of the global population today.

Former New York City Mayor Michael Bloomberg (now returned to chair the eponymous Bloomberg LP organization after 12 years in office) is serving as the United Nations Secretary-General’s Special Envoy for Cities and Climate Change, and spearheads the Compact of Mayors initiative.

Ambitious plans: commitments to the Compact of Mayors are set to deliver half of the global urban potential GhG emissions reductions by 2020. But, there is still much more to do, the Compact notes, on the part of the nations in which the cities are located. (Like the USA!).

# # #

And…CDP’s Cities Initiative reports that more than 500 cities are now disclosing their initiatives related to climate change. More than US$26 billion in climate-related projects are underway or targeted.

CDP is providing a global platform for cities to measure, manage and disclose their environmental data on an annual basis. This is intended to help local governments manage emissions, build greater resilience and protect against the growing impacts of climate change. So far, cities are disclosing almost 5,000 climate actions.

And be sure to note this: there has been a 70% increase in cities’ sustainability-related disclosure since the Paris Agreement was adopted; 1,000-plus economic opportunities have been identified by almost 400 cities; and, 56% of cities identified opportunities to develop new businesses or industries linked to climate change.

More information for you at: https://www.cdp.net/en/cities

# # #

Then there is “America’s Pledge” — an effort involving 227 cities and counties, 9 states and 1,650 businesses and investors that have pledged to uphold the U.S.A. commitment to the Paris Agreement! (Reducing our country’s GhG emissions by 26% to 38% by 2025, compared to 2005 levels.) The group is led by California Governor Jerry Brown and Michael Bloomberg.

As The New York Times reported on July 11, 2017 (“US Cities, States and Business Pledge to Measure Emissions”):

Former Mayor/Bloomberg LP Chair Michael Bloomberg:
“The American government may have pulled out of the Paris Agreement, but American Society remains committed. We will redouble our efforts to achieve its goals.

California Governor Jerry Brown:
“Were sending a clear message to the world that America’s states, cities and businesses are moving forward with our country’s commitments under the Paris Agreement, with or without Washington DC.”

The new group will measure the effect (by 2025) of new climate actions by cities, states, business, universities, that sign on for the effort. The analysis will be performed by the World Resources Institute (WRI) and Rocky Mountain Institute.

# # #

Bloomberg Philanthropies
All of these efforts of course takes money!  Michael Bloomberg’s philanthropic arm – Bloomberg Philanthropies – has a cities-focused initiative: What Works Cities Initiative.

This is one of the largest efforts to help cities use data for making local decisions, and get technical assistance from experts through the  Bloomberg organization.

Four more cities just joined up: Arlington, Texas; Charleston, South Carolina; Fort Collins, Colorado; Sioux Falls, South Dakota. That makes 85 U.S. cities in 37 states are now participating.

Cities commit to a “WWC” Standard, using data to improve performance and results that make their residents’ lives better. More info at: https://whatworkscities.bloomberg.org/cities/

# # #

Why Is City-Level Action on Climate Change So Critical?

The total population of urban areas (486 areas) in the United States of America was 80.7% of the country’s total population in 2010, according to  an analysis by Reuters News.

More Americans are moving to urban areas, according to the 2010 census. (As reported by Reuters in March 2012.) The nation’s total population growth was 9.7% from 2000 to 2010; urban growth was 12.1%. In some places the growth was 50% — like Charlotte, North Carolina (64.%).

The most urbanized state in America is California — where 95% of the total population live in urban areas (35.4 million people).

Los Angeles/Long Beach/Anaheim is the nation’s second largest city (at 12,1 million residents); New York/Newark NJ is #1 (18.4 million); Chicago is #3, noted Reuters in the story.

So — we are keeping close watch on the significant efforts at the city/municipal level efforts in the United States of America with regard to developing climate change solutions.  Cities and states are showing the way for this nation, as the Federal government at least for now has abandoned climate change leadership.

Summing up:  With literally thousands of  local government units developing partnerships with the private sector, and with NGOs and other stakeholders, and looking to the U.S. capital markets to help fund infrastructure and other initiatives — a climate change economic boom is underway!  Are you part of it?  We see great o-p-p-o-r-t-u-n-i-t-y spelled out at the American municipal level.

# # #

Notes:

**Center for Climate and Energy Solutions (C2ES) is an independent, non-partisan, nonprofit organization working to forge practical solutions to climate change. Link: www.c2es.org.

 

 

SUSTAINABILITY REPORTS DATA ANALYST INTERNSHIP AVAILABLE AT GOVERNANCE & ACCOUNTABILITY INSTITUTE

Opportunity:  Learn to Analyze Data and Interpret Content from Global Reporting Initiative (GRI) Sustainability Reporting

Position:  Sustainability Report Data Analyst Internship Available (supporting  G&A’s GRI Data Partner Relationship)

Location: Virtual 
Work is done remotely with a flexible work schedule – at your own location.  Initial training via Web. G&A offices are located in NYC.

Time Requirements: Position requires approximately 10 hours a week and begins ASAP.  The timing of the work is flexible and can be done remotely for a majority of the time required.  The internship will take place starting in July 31, 2017 and ending February 28, 2017.

Description
Founded in 2006, Governance & Accountability Institute is a New York City-based company that specializes in research, communications, strategies and other services focused on corporate sustainability and corporate ESG performance (“Environmental, Social, Governance”) issues.

G&A is offering the opportunity for an internship for a qualified student interested in learning more about these topics. G&A Institute interns learn important elements about the GRI Standards for Sustainability reporting as well as other common frameworks such as CDP, RobecoSAM CSA (DJSI), SASB, IIRC, SDGs, and many others that can be used in their future work situations.

This is a very fast growing area of interest to corporations and Wall Street.  The GRI reporting framework is the most widely used in the world for these types of reports.

G&A is the exclusive data partner for the United States, United Kingdom and Republic of Ireland for the Global Reporting Initiative (GRI).  The Global Reporting Initiative is a non-profit organization that promotes the use of sustainability reporting as a way for organizations to become more sustainable and contribute to sustainable development.

GRI provides all companies and organizations with a comprehensive set of sustainability reporting standards that are the most widely used and respected around the world.  Currently thousands of global organizations use the GRI to report on their Environmental, Social, and Corporate Governance (ESG) strategies, impacts, opportunities and engagements (www.globalreporting.org).

As the exclusive US, UK and Ireland data partner of the GRI, Governance & Accountability Institute’s role is to collect, organize, and analyze sustainability reports that are issued by corporations, public entities, not-for-profits and other entities in the United States, United Kingdom and Republic of Ireland for the benefit of all stakeholders.

The Intern Opportunity
In this role, the analyst will work as part of a team to analyze Sustainability reports for inclusion in the largest global database of Sustainability reports, the GRI’s Sustainability Disclosure Database (database.globalreporting.org).

Learning to read, analyze, use, and structure data from reports using the GRI Standards, GRI G4, GRI-Reference as well as NON-GRI corporate and institutional reports will comprise the majority of this assignment.  The research will also contribute to several published research reports on various trends in sustainability reporting which are widely referenced by media, academics, business, capital markets players and other important sustainability stakeholders.

The student(s) selected will have the opportunity to experience a fast-paced, highly-adaptive (and nurturing) culture in a small but growing company with a unique niche. This is a hands-on position with considerable learning opportunity for those headed for a career in corporate responsibility, sustainability, citizenship, or impact investment.

G&A interns get public recognition for their work in our published reports, on our web platform and in other ways. To see what other interns have been doing (and their backgrounds) check out the intern Honor Roll at http://www.ga-institute.com/about-the-institute/the-honor-roll.html

Requirements
Applicants should demonstrate:

  • Strong background and keen interest in ESG and Sustainability issues and topics.
  • Basic understanding of business and the capital markets.
  • Strong technical, communication, and organizational skills.
  • Research and Analysis experience, a preference if focused on sustainability topics.
  • Basic skills in Excel / Google Sheets and researching on Google are required.
  • Self-driven and Independent ability to meet expectations and deadlines.
  • Must be fluent in English, additional languages are a plus.
  • Applicants with writing and editing abilities will have preference.

Application Process
Interested students should send a resume outlining education and skill sets. As an option, a one to two page introduction essay on what you would like to learn more about (in terms of your career goals), what your interests are, and anything else you feel may be relevant to the job/our organization will also be welcomed.    Samples of writing or research on sustainability or other topics are also a plus.

Send application materials to Governance & Accountability Institute at:
lcoppola@ga-institute.com & agallagher@ga-institute.com

Corporate Sustainability Disclosure – On the Rise But Does the Disclosure Address What Investors Seeking?

The good news is that more public company managements are involved in, and approving, broader disclosure on sustainability information.  There are widely-accepted frameworks in place to help boards and managements better understand the needs and desires of stakeholders — especially providers of capital (asset owners, managers, analysts) seeking meaningful data and accompanying narrative to explain the progress being made (or lack thereof) in ESG performance.

The most widely-embraced among these frameworks include the Global Reporting Initiative’s GRI Standards (previous version known as the GRI G4 — fourth generation); the CDP responses by companies (climate change, water, forestry, supply chain, and more); the RobecoSAM “Corporate Sustainability Assessment” (CSA) survey for consideration for inclusion in the Dow Jones Sustainability Index(es); and the more recent Sustainable Accounting Standards Board (SASB) materiality-focused guidelines for CFOs and CEOs to consider for inclusion in the 10-k and other regulated disclosures (and structured reporting).

So how are companies doing?  Michael Cohn, Editor-in-Chief, Accounting Today (.com) presented his views on corporate sustainability reporting in a commentary that is our Top Story for you today.  He observes:  “Sustainability information is increasingly a part of corporate reporting, but many companies are still relying on boilerplate language in their disclosures.”

His source is the review by SASB staff of the latest 10-k and 20-F corporate filings by the top companies in 79 industries (SASB has released its suggestions for sustainability-related disclosure that is sought by investors for each of the industries).  In the survey, SASB found 69 percent of companies are reporting on at least three-fourths of SASB’s suggested industry standard, with almost 40% disclosing on every SASB topic.(Note that companies in their 10-K filings may or may not directly reference the appropriate SASB standard.)

The most common form of disclosure?  SASB says…boilerplate language, used more than half the time that a SASB topic was addressed.

So the good news is that public companies are disclosing more about their sustainability efforts, their ESG performance, and the downsides are lack of specificity; lack of meaningful and comparable metrics; boilerplate language.

The most often reported element of “ESG” is the S (social/societal). In the continuing evolvement of more integrated reporting (financial and ESG, with SASB encouraging disclosure via the 10-k), “capital” beyond the financial (capital) was addressed by companies in some way.  These included social capital (data security, privacy), human capital (labor relations, health and safety), and environmental (natural).

A key element of SASB suggested reporting on the material aspects is innovation and more details of the business model for investors; this was addressed less frequently, said the SASB staff, in the reporting they analyzed.

Note that we are still anxiously awaiting the Securities & Exchange Commission moves on the Concept Release (for modernizing Reg S-K disclosure); two-thirds of respondents to the SEC invitation addressed sustainability-related concerns with 80% calling for improved sustainability disclosure in corporate filings with SEC.

There’s more details in the Accounting Today commentary (Top Story).

Here at G&A Institute we have a comprehensive research and analysis effort underway that will help corporate managements and boards better understand “what matters” to their peers, and to investors, in terms of sustainability disclosure.  We’ll be analyzing over 2000 global GRI sustainability reports looking at the materiality decisions of companies in various sectors around the world on many ESG issues, including an examination of issues tied to the Sustainable Development Goals (SDGs).  We’ll have more news on that effort in the weeks ahead.

Top Stories This Week…

Companies struggle to go beyond boilerplate in sustainability disclosures
(Friday – June 16, 2017)
Source: Accounting Today – Sustainability information is increasingly a part of corporate reporting, but many companies are still relying on boilerplate language in their disclosures, according to a recent report.

82% of the S&P 500® Published a Sustainability Report in 2016 – Analysis Just Released on the Index Universe of Leading Companies

Everyone in the investing world and the corporate suite knows of the importance of the S&P 500 Index®; it’s the intellectual property of the S&P Dow Jones Indices unit of S&P Global and is the widely used benchmark by which asset managers track their performance (against the index performance).

Many investments are benchmarked to the index – almost a total of US$8 trillion, in fact.  The index is made up of 500 leading (large-cap) public companies and represents roughly 80% of the total market capitalization of these enterprises.   The index was launched 60 years ago (in March 1957).

Investopedia explains that the index covers the majority of the US economy and is considered by experts to be a highly reliable indicator of overall stock market performance. The index managers select corporate stocks to be in the index by a number of factors, according to liquidity, market size and industry category; and, the company included represents a proportion of the portfolio.  There are small changes year-to-year in the index as companies are selected in and dropped from inclusion.

The G&A Institute team in carefully tracking the increasing embrace of sustainability by US companies, and the reporting on the “sustainability journey” by these large-cap public companies began analyzing the S&P 500 companies’ disclosure and structured reporting on sustainability (and related terms, such as corporate responsibility, environmental update, corporate citizenship, and others).

Our first analysis was shared publicly in 2011, for the results of year 2010 company reporting.  We found that just about 20% or one-in-five of the S&P 500 universe was publishing a sustainability report in some form.  That became our baseline.  The 2012 reporting analysis revealed a dramatic increase — more than half of the companies were then reporting (the tally was 53%).

The number increased considerably in 2013 to 73% and then 75% the following year.  By 2015 the tally was 81% (eight of 10 companies in the index) and now we have year 2016 results — holding steady at 82%.  We share the news broadly in our Flash Report at the conclusion of the analysis — that’s our Top Story for you this week.

Our analysis includes identifying GICS sector reporting (financials, health care, energy, etc.), and the increase year-to-year where that occurs within a sector.

G&A’s EVP Louis Coppola has been the architect of the S&P 500 analysis, with the careful analytical work done by successive teams of outstanding intern-analysts over the years.  This year’s team includes Alvis Yuen, team leader who has worked on the annual analysis for several years now; and team members Amanda Hoster, Elizabeth Peterson, Juliet Russell, Alan Stautz, Yangshengjing “UB” Qiu, and Olivia (Sihui) Wang.  We thank these outstanding professionals for their dedication and hard work completing the analysis.

The investment community takes a close look at the G&A Institute research and each year reaches out to the non-reporters (a shrinking base, we’re happy to say) for engagement, and often, targets for filing shareholder resolutions to encourage the start of reporting on the corporate sustainability efforts. (In many cases for the holdouts, there are no such efforts underway — and so, no reports!)

You’ll find more details about the 2017 work (examining 2016 reporting results) in our Flash Report.  Do send us an email if you have questions about the exercise if you would like to have more information.

Read more at:

FLASH REPORT: 82% of the S&P 500 Companies Published Corporate Sustainability Reports in 2016
(Wednesday – May 31, 2017)
Source: Governance & Accountability Institute, Inc.  – In the sixth annual monitoring and analysis of S&P 500 Index® company sustainability reporting, just completed by the Governance & Accountability Institute research team, the findings are that eighty-two percent (82%) of the companies included in this important investment benchmark published a sustainability or corporate responsibility report in the year 2016.

The S&P Index is one of the most widely-followed barometers of the US economy, and conditions for large-cap public companies in the capital markets.

To put this in context, in charting prior years reporting, G&A found that:

  • in the year 2011, just under 20% of S&P 500 companies had reported on their sustainability, corporate social responsibility, ESG performance and related topics & issues;
  • in 2012, 53% (for the first time a majority) of S&P 500 companies were reporting;
  • by 2013, 72% were reporting — that is 7-out-of-10 of all companies in the popular benchmark;
  • in 2014, 75% of the S&P 500 were publishing reports;
  • in 2015, 81% of the total companies were reporting;
  • in 2016, 82% signals a steady embrace by large-cap companies of sustainability reporting.

Meet Donald Schepers, PhD – Associate Dean, Zicklin School of Business; Professor Of Management, Baruch College/CUNY @ #Intro2ESG Training

Presenting at Introduction to ESG, Sustainable & Impact Investment OneDay Training
The How & Why of Applying ESG to Corporate Valuations
Hosted by Zicklin School of Business at Baruch College/CUNY on June 15th

Introduction:  For professionals in the capital markets, and in the corporate sector, G&A Institute and Global Change Associates are teamed to present a one-day professional training program, hosted by Zicklin School of Business at Baruch College/CUNY, in midtown Manhattan.  This is an excellent introduction to the application of ESG factors to investment making decisions and corporate valuations.  Find out more at https://intro2esg.eventbrite.com

ESG = the corporate environmental, social or societal and corporate governance factors to be evaluated by the financial analyst, asset owner, asset manager, and others in the capital markets in looking beyond the financial in selecting public companies for “buy/sell/hold” portfolio management decisions. (This is also referred to as “sustainable investing,” “impact investing,” and similar titles by practitioners.)

The outstanding faculty presenting during the one-day course will include experts in ESG / sustainable / impact investing, covering topics such as best practices; data sources; analytical tools; research resources; methodologies; why ESG matters; and realized outcomes using these approaches to analysis and investment management.

MEET ONE OF YOUR COURSE LEADERS
Donald Schepers, PhD
Associate Dean, Zicklin School of Business; Professor Of Management, Baruch College / CUNY
TOPIC: Welcoming Remarks

 

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CAREER BACKGROUND: DONALD SCHEPERS, PHD

Donald H. Schepers is Associate Dean of the Zicklin School of Business and Professor of Management at Baruch College, City University of New York. Dr. Schepers teaches Social and Governmental Environment of Business, Corporate Governance, and Business Ethics to MBA and Executive MBA programs. Dr. Schepers also teaches Strategic Planning and Control in the Baruch/Mt. Sinai Healthcare Administration MBA program.

He is frequently called on for his expertise is:

  • corporate political campaign activity and disclosure;
  • corporate governance and codes of conduct;
  • socially responsible investing;
  • The impact of non-governmental organizations on business policy.

Professor Schepers has published in Organizational Behavior and Human Decision Processes; Business and Society Review; Business and Society; Journal of Business Ethics; Human Resource Management Review; Corporate Governance; and, Journal of Behavioral and Applied Management.  He has numerous cases and book chapters to his credit.

He is a member of the Society of Business Ethics; the Academy of Management; the Eastern Academy of Management; the International Society for Business, Economics and Ethics; and, the International Association of Business and Society.

Prior to receiving his PhD, he taught high school science and mathematics, and was President of the Marianist Retreat and Conference Center, a small non-profit conference center outside St. Louis, Missouri. He holds an MBA from Tulane University; a Masters of Divinity from St. Michael’s Faculty of Theology, University of Toronto; and, a Master’s of Science in Business Administration and a PhD in Business Administration from the University of Arizona.

For more information about the course and how to register, visit: https://intro2esg.eventbrite.com

Meet Hank Boerner, Chairman & Co-Founder, Governance & Accountability Institute @ #Intro2ESG Training

Presenting at Introduction to ESG, Sustainable & Impact Investment OneDay Training
The How & Why of Applying ESG to Corporate Valuations
Hosted by Zicklin School of Business at Baruch College/CUNY on June 15th

Introduction:  For professionals in the capital markets, and in the corporate sector, G&A Institute and Global Change Associates are teamed to present a one-day professional training program, hosted by Zicklin School of Business at Baruch College/CUNY, in midtown Manhattan.  This is an excellent introduction to the application of ESG factors to investment making decisions and corporate valuations.  Find out more at https://intro2esg.eventbrite.com

ESG = the corporate environmental, social or societal and corporate governance factors to be evaluated by the financial analyst, asset owner, asset manager, and others in the capital markets in looking beyond the financial in selecting public companies for “buy/sell/hold” portfolio management decisions. (This is also referred to as “sustainable investing,” “impact investing,” and similar titles by practitioners.)

The outstanding faculty presenting during the one-day course will include experts in ESG / sustainable / impact investing, covering topics such as best practices; data sources; analytical tools; research resources; methodologies; why ESG matters; and realized outcomes using these approaches to analysis and investment management.

MEET ONE OF YOUR COURSE LEADERS
Hank Boerner
Chairman & Co-Founder, Governance & Accountability Institute, Inc.
Topic:  Introduction to Corporate ESG Strategies, Performance, Actions — What is Corporate ESG & Why It Really Matters to Shareowners

* * * * * * * *

CAREER BACKGROUND: HANK BOERNER
Henry (Hank) Boerner is Chairman and Chief Strategist of Governance & Accountability Institute, Inc., a New York-based (for-profit) research, knowledge management, advisory and strategies service provider.  The company serves clients in the corporate sector, in capital markets organizations and organizations in the not-for-profit sector.

Hank leads the Institute team’s client engagements dealing with client engagement in such areas as sustainability, corporate responsibility, corporate governance, issue management, crisis management, disclosure, and strategic corporate communications.

During his career he has been a business & financial journalist, corporate manager, corporate strategist, issue management consultant, and senior level strategy advisor. For 30 years he has provided corporate and investment community clients with issues management strategies, advice and programs.

Hank’s current work is focused on identifying and addressing ESG issues (corporate environmental, societal, governance performance factors) and assisting corporate managements in developing their ESG strategies, organizing teams and initiatives, coaching executives, and facilitating disclosure and structured reporting on the progress of the company’s sustainability journey.

Hank was a managing partner in the Rowan & Blewitt management consulting organization for two decades before co-founding the Institute.  (The Rowan & Blewitt issue and crisis management practice served Fortune 100 clients,  and was acquired by Interpublic Group of Companies – NYSE:IPG.)

Hank is active in key professional organizations including: the US Forum for Sustainable & Responsible Investing (US SIF); its analyst network, SIRAN; the National Association of Corporate Directors (NACD); New York Society of Securities Analysts (NYSSA – he is chair of the Sustainable Investing Committee); and,  the National Investor Relations Institute (NIRI).  He was recognized by the NACD in the prestigious Directorship 100 ranking, in 2011 and 2012 as one of “people to watch in corporate governance affairs.”

He serves on the Global Advisory Council of Cornerstone Capital Group, a New York-based financial services firm that applies sustainable finance across the capital markets (investment consulting, investment banking).  Principal:  Erika Karp, former head of global research, UBS.  Information at  http://cornerstonecapinc.com/bios/hank-boerner/

Hank has been a contributing editor for Corporate Finance Review ( a journal for CFOs and corporate finance managers) published by Thomson Reuters) from 2002 to 2015, commenting on trends in corporate governance, sustainability and related issues.  He now provides this commentary to T-R’s “Accounting & Compliance Alert” service. He has authored commentaries for Financial Times, Bloomberg BNA, and numerous print and digital platforms.  He is co-author of “Strategic Governance – Enabling Financial, Environmental & Social Sustainability,” published in 2010.  His current boo — “Trends Emerging — a Look Head Ahead of the Curve in ESG / Sustainability / CR / SRI”  will be published in July 2016.

Earlier in his career, Hank was a board-elected officer and head of communications of the New York Stock Exchange, managing NYSE communications and advising listed companies on timely disclosure, transparency and disclosure and reporting. At the start of his corporate career, he was American Airlines’ national corporate responsibility officer; later, he was a senior communications officer of the NY Metropolitan Transportation Authority.

He served as staff advisor in New York Governor Nelson A. Rockefeller’s administration, and later, provided counsel pro bono to Governor Mario M. Cuomo and Attorney General and then Governor Eliot Spitzer. Presently, he is informal advisor to New York State Comptroller Thomas DiNapoli, sole trustee of the New York State Common Fund, the retirement system for public employees throughout the state.

For more information about the course and how to register, visit: https://intro2esg.eventbrite.com

Meet Louis Coppola, EVP & Co-Founder, Governance & Accountability Institute @ #Intro2ESG Training

Presenting at Introduction to ESG, Sustainable & Impact Investment OneDay Training
The How & Why of Applying ESG to Corporate Valuations
Hosted by Zicklin School of Business at Baruch College/CUNY on June 15th

Introduction:  For professionals in the capital markets, and in the corporate sector, G&A Institute and Global Change Associates are teamed to present a one-day professional training program, hosted by Zicklin School of Business at Baruch College/CUNY, in midtown Manhattan.  This is an excellent introduction to the application of ESG factors to investment making decisions and corporate valuations.  Find out more at https://intro2esg.eventbrite.com

ESG = the corporate environmental, social or societal and corporate governance factors to be evaluated by the financial analyst, asset owner, asset manager, and others in the capital markets in looking beyond the financial in selecting public companies for “buy/sell/hold” portfolio management decisions. (This is also referred to as “sustainable investing,” “impact investing,” and similar titles by practitioners.)

The outstanding faculty presenting during the one-day course will include experts in ESG / sustainable / impact investing, covering topics such as best practices; data sources; analytical tools; research resources; methodologies; why ESG matters; and realized outcomes using these approaches to analysis and investment management.

MEET ONE OF YOUR COURSE LEADERS
Louis Coppola
Executive Vice President & Co-Founder, Governance & Accountability Institute, Inc. Topic:  Bridging the Perceived Gap Between Sustainability & Profitability:
Materiality, Risk Management & How Top and Bottom Lines Are Affected

* * * * * * * *
CAREER BACKGROUND: LOUIS COPPOLA
Louis Coppola is EVP and a co-founder of Governance & Accountability Institute, a New York based sustainability consulting, research and advisory firm. He also serves on the Board of Directors for The Global Sourcing Council, a global non-profit focused on educating and inspiring sustainability in sourcing and supply chains.

Louis focuses particularly on providing advice to corporate and investor clients related to sustainability strategy, disclosure (reporting), investment and performance.

G&A Institute is the exclusive Data Partner for GRI for the United States, United Kingdom and Republic of Ireland.  Lou directs the Institute’s relationship with GRI including the activities around the Data Partner relationship, “Organizational Stakeholder” (OS) relationship, and several joint research publications.

Lou is a co-chair of the Social Investment Forum’s (SIF) – Sustainable Investment Research Analyst Network’s (SIRAN) Sustainable Education and Company Engagement (SECE) committee.  He is also an active New York Society of Securities Analyst (NYSSA), Sustainable Investing Committee steering member.

Lou is frequently called on by the media, academics, and industry to contribute to articles, speak on panels, and present his ideas on ESG & Sustainability related topics.  He also coordinates the Institute’s various public research projects such as “Sustainability – What Matters?“, and studies of sustainability reporting external assurance practices in collaboration with GRI, Bloomberg, and the big four accounting firms.

Louis contributed to the US section of “Carrots & Sticks III“, a collaborative publication with GRI, KPMG, UNEP, Centre for Corporate Governance in Africa and various other stakeholders.  The report analyzed the growing number of sustainability reporting policies and guidance from countries around the world.

Louis is an adjunct professor at the Bard M.B.A in Sustainability NYC campus teaching courses on business pragmatics of sustainability focusing on disclosure standards and analysis of sustainability reports.

Louis is expert at translating concepts related to current and emerging technology to readily accessible tools and resources. He plays the lead role in the research, recommendation and deployment of all technology including interactive Web platforms, content management systems, e-distribution, automated intelligence gathering, and other solutions to meet the “command and control” needs at G&A Institute.

Prior to forming the Institute, Louis Coppola worked as an Account Executive – Information Technology for Rowan & Blewitt, a global crisis management and issues management consulting firm that was under the corporate umbrella of Interpublic Group (NYSE:IPG).  The firm’s clients were Fortune 100 and multinational companies. Louis was responsible for managing the technological implementation of the crisis and issues management strategies for Rowan & Blewitt.

Louis Coppola was graduated with Honors from Molloy College with a Masters Degree in Business Administration (MBA). In recognition of high scholastic achievement, he was selected for membership in Sigma Beta Delta, an international honor society in Business, Management, and Administration. He received his undergraduate B.S. with Major in Computer Information Systems and Minor in Computer Science.   Lou has qualified and is an active member of Mensa.

For more information about the course and how to register, visit: https://intro2esg.eventbrite.com

Meet Peter Fusaro – Chairman – Global Change Associates @ #Intro2ESG Training

Presenting at Introduction to ESG, Sustainable & Impact Investment OneDay Training
The How & Why of Applying ESG to Corporate Valuations
Hosted by Zicklin School of Business at Baruch College/CUNY on June 15th

Introduction:  For professionals in the capital markets, and in the corporate sector, G&A Institute and Global Change Associates are teamed to present a one-day professional training program, hosted by Zicklin School of Business at Baruch College/CUNY, in midtown Manhattan.  This is an excellent introduction to the application of ESG factors to investment making decisions and corporate valuations.  Find out more at https://intro2esg.eventbrite.com

ESG = the corporate environmental, social or societal and corporate governance factors to be evaluated by the financial analyst, asset owner, asset manager, and others in the capital markets in looking beyond the financial in selecting public companies for “buy/sell/hold” portfolio management decisions. (This is also referred to as “sustainable investing,” “impact investing,” and similar titles by practitioners.)

The outstanding faculty presenting during the one-day course will include experts in ESG / sustainable / impact investing, covering topics such as best practices; data sources; analytical tools; research resources; methodologies; why ESG matters; and realized outcomes using these approaches to analysis and investment management.

MEET ONE OF YOUR COURSE LEADERS
Peter Fusaro
Chairman, Global Change Associates
Topic:  Case Study of Corporate Malfeasance: The VW Emissions Scandal

A conversation with Peter:

Q: How is your day-to-day work related to the Intro to ESG, Sustainable & Impact Investment Certificate Program to be presented at Baruch?
[PF]  I work broadly in the area of corporate finance for sustainability for private companies in the area of clean energy, clean water and sustainable agriculture. Most of my work centers in clean energy arena for both electric power generation and transportation. 

Today, I work on solar energy finance as well as energy storage with advanced batteries and fuel cells. I work with a  hydrogen manufacturing company for both energy storage and transportation of fuel cell vehicles. In the past I have worked on taking the lead out of gasoline with the US EPA and was a consultant to the Toyota Prius development team. 

Because of this expertise, I am intimately aware of the VW emissions scandal and its ramifications in terms of corporate governance for that company.

Q:  What can attendees expect to learn from your session?
[PF] Course participants will learn that the VW emissions scandal is not a one-off crisis event. That Volkswagen has committed many transgressions in the past 25 years and tried to cover them up. I will go through the specifics of how they tried to get away with the fraudulent use of software to hide defects in their diesel fuel technology of their engines.  So far, this has lead to over US$15 billion in fines and great damage to their corporate reputation. It is a text book example of corporate malfeasance.

Q:  What advice do you have or opportunity that you see for attendees who complete the Certificate Program?
[PF] Attendees will learn not only the basics of ESG but also come away with some ideas on what to look for investment in public companies. The rigorous ESG screens are still evolving but with the expertise of the instructors for this program, course participants will learn what analysis is needed to vet both investment and sustainability parameters within companies. Moreover, they will learn what red flags to look for in any due diligence process.

* * * * * * * *

CAREER BACKGROUND: PETER FUSARO
Peter C. Fusaro is a best-selling author, keynote speaker and thought leader on emerging energy and environmental financial markets.  He’s Chairman of Global Change Associates, a financial services advisory in New York City, and author of “What Went Wrong at Enron,” as well as 15 other books on energy and the environmental financial markets.

Peter has been on the forefront of energy and environmental change for more than 40 years, his work focusing on how to use energy more efficiently and in an environmentally-benign manner.  His current focus is on environmental financial market acceleration toward the goal of the low-carbon economy through sustainable finance in renewable energy, clean technology and resource efficiency.  Peter founded and runs the Wall Street Green Summit — now in its 15th year. Information at: www.wsgts.com.

Peter served at the US Department of Energy in the 1970s where he worked on removing lead in gasoline with the U.S. Environmental Protection Agency (EPA), as well as co-writing an Environmental Impact Statement on LNG (liquefied natural gas) safety and siting.

He was a senior policy analyst in the New York City Mayor Office of Energy & Telecommunications, where he created the first energy efficiency programs for electricity and natural gas with Con Edison (the electric utility) and Brooklyn Union Gas in the mid-1980s.   In the early-1990s he established his consultancy and implemented energy efficiency and conservation programs for the Port Authority of New York & New Jersey, including lighting retrofits, mechanical systems and energy savings.

Peter worked with the Toyota Prius development team on electric power issues in the mid 1990s. He has run a cleantech venture capital fund as well as worked with hedge funds on portfolio construction. Today, he works with several clean energy technologies and fund managers in clean energy project finance.

Peter was graduated with an M.A. in International Relations from Tufts University and a B.A. from Carnegie-Mellon University.  Peter was an adjunct professor at Columbia University, where he taught a popular renewable energy project development and finance course each fall semester to second year graduate students.  He is on the advisory board of Bard College’s MBA in Sustainability program as well as having served for eight years on the External Advisory Board of the ERB Institute for Global Sustainable Enterprise, Ross School of Business, University of Michigan.

For more information about the course and how to register, visit: https://intro2esg.eventbrite.com