NASDAQ Exchange Publishes the “ESG Reporting Guide” for Corporate Managements and Boards

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

There is encouraging news for sustainability professionals coming from the world of stock exchanges this month.  The NASDAQ Exchange just published its guide for listed companies – as well for privately-owned firms as perhaps future IPOs for NASDAQ listing – for companies’ public ESG reporting. 

This is the ESG Reporting Guide – A Voluntary Support Program for Companies”.

The pilot program for the guide effort got underway with NASDAQ’s Nordic and Baltic markets in 2017; the May 2019 guide includes third party reporting methodologies for company leaders’ education. 

The recommendations are “completely voluntary” for companies, the exchange emphasizes. Evan Harvey is the Global Head of Sustainability for NASDAQ and key player in development of the guide.

As the corporate ESG reporting pace continues to increase in both volume and velocity, company boards and managements do need more guidance on evolving ESG / sustainability standards and frameworks that could be used [for their increased disclosure and structured reports such as those published annually or periodically for their investors]. 

These frameworks, NASDAQ explains, include the Global Reporting Initiative Standards, (GRI); the standards of the Sustainable Accounting Standards Board (SASB) for 79 industries; the TCFD recommendations (the work of the FSB’s Task Force on Climate-Related for Financial Disclosures); and (as example) the guidance and frameworks for industry reporting such as GRESB for the real estate industry. Note: G&A Institute is the Data Partner for the GRI in the U.S.A., U.K. and Republic of Ireland.

The NASDAQ guide developed along the lines of such ESG / sustainability reporting “being voluntary” by private sector companies underscores that we are yet not quite at the “order to publish” from the United States stock exchanges.

Halfway ‘round the world, the Hong Kong and Singapore stock exchanges set the pace with such listed company rules.  In Hong Kong, listed companies must “comply or explain” for their ESG reporting; in Singapore, the rule is to publish the annual corporate sustainability report after 1/1/17 – also on comply or explain basis.

And in Europe, companies larger than certain market caps and employee counts must report on their CR activities; (“The European Directive of Non-Financial and Diversity Information by Certain Large Companies”, part of the EU’s Initiative of CSR.)

Getting to a “listed rule requirement” that exchange-listed companies must publish an annual or more frequent corporate sustainability report is a heavy lift in the U.S. capital markets, which typically reflect the direction of the political winds in Washington D.C. and the opinions within the corporate community. (Such as: this type of reporting means more work and expense.)

Right now, the chair of the SEC – the regulator of both the stock exchanges and publicly-traded companies – is a Republican and two other members of the five-member Commission are “Rs”.  Their party’s leader in the White House is busily dismantling environmental protection and other rules and pulling the U.S. out of the historic Paris Agreement on climate change.

Background:  The regulatory activities of the stock exchanges based in the United States are governed by statutes passed by the U.S. Congress (such as the Securities Act of 1933 and Exchange Act of 1934) and the stock exchanges therefore by federal law are designated as non-governmental “self-regulating organizations” or SROs. 

As SROs, the New York Stock Exchange and NASDAQ Exchange have certain authority to establish rules and regulations and set standards for companies (“issuers”) whose stock is listed for trading on their exchange.  Of course, the views of the listed company leaders and other stakeholders are considered when rules are being developed.

Proposed listing company or brokerage (“member”) rules are filed with the Securities & Exchange Commission (created by that 1934 law) to oversee and regulate certain activities. And so, the proposed rules for listed companies, brokerage firms and other entities are filed with SEC and public comment invited before SEC approval and then the exchange’s official adoption of the Rule.  

A recent NASDAQ SEC filing example is: “Notice of Filing of Proposed Rule to Adopt Additional Requirements for Listings in Connection with an Offering Under Regulation A of the Securities Act” in April 2019.

Should the U.S. exchanges adopt rules requiring corporate ESG reporting?  Could they?  Will they? Will SEC review and approve such rules for exchange-listed firms?  These are important questions for our times.  Of course, many people are “Staying Tuned!”

An important P.S.: The 1934 Act also ordered publicly traded companies to file annual and other periodic reports.  In the 1970s, the NYSE listing rules required listed companies to begin publishing quarterly reports; some of the listed companies reacted with great alarm. 

But shortly afterward the SEC made this a requirement for all listed companies. And so the familiar 10-K, 10-Q etc.  This extends to non-US companies raising capital in the U.S. such as listing their securities on an American exchange.

Note from Hank Boerner: This writer once served as the NYSE’s head of communications and as the Exchange’s advisor to listed company investor relations, corporate secretaries and corporate communicators on things like timely disclosure and related topics.

Our announcement of [new] listed company rules calling for quarterly corporate reporting and other reforms was quickly greeted by many more jeers than welcoming cheers! But today, quarterly reporting is a settled matter. One day, we may see the same for corporate sustainability reporting.

Click here to find out more about Hong Kong and Singapore exchange rules.

NASDAQ, NYSE, Hong Kong, Singapore – all are participating in the World Federation of Stock Exchanges (WFE) Principles to exert leadership in promoting a sustainable finance agenda. Those principles are explained in the report here.

This Week’s Top Stories

Nasdaq Launches Global Environmental, Social And Governance (ESG) Reporting Guide For Companies
(Thursday – May 23, 2019) Source: NASDAQ – Nasdaq (Nasdaq: NDAQ) has announced the launch of its new global environmental, social and governance (ESG) reporting guide to support public and private companies. The 2019 ESG Reporting Guide includes the latest… 

More information is available at: https://business.nasdaq.com/esg-guide

4th in Series: The Food Industry – GRI & SASB Standards In Focus – Perspectives on Alignments & Differences

By Jessica Caron –  G&A Institute Sustainability Report Analyst Intern

A comparison of the SASB Meat, Poultry & Dairy Standard — which is designed for use by companies involved in the raising, slaughtering, processing and packaging of animal food product — to the GRI Standards must start with the observation that the GRI Standards are general and not industry-specific, asking about topics that apply to most business organizations (such as employee benefits).

The SASB industry standards focus on industry-specific ESG information — such as animal welfare.

The GRI Standards also, in being of value in generating a general portrait of any type of organization, suggest disclosure of a wide range of basic information — such as legal form and markets served as well as significant amounts of content with information directly related to corporate ESG strategies and performance.

The only basic information SASB Standards suggest in the category is information about the number of processing and manufacturing facilities, amount of animal protein produced by category, and percentage of animal protein production that is outsourced.

We should keep in mind SASB is investor-focused, and GRI is stakeholder focused (of course, including investors). And so the information suggested for disclosure by the reporter (the company disclosing) has different end users in mind when using either or both of the standards for corporate reporting.

The GRI Sector Disclosure:

The SASB suggested industry standards are more similar to the Sector Disclosures from the GRI G4, the predecessor of the GRI Standards. Each Sector Disclosure consists of additional disclosures and guidance for answering general GRI disclosures tailored to a certain industry, and thus attains the level of industry focus that the SASB standards have.

The GRI Sector Disclosure most similar to the SASB Meat, Poultry, and Dairy Standard is the Food Processing Sector Disclosure, which is designed for food processing companies rather than farmers, but including questions about a company’s supply chain, which does include farmers. The G4 Food Processing Sector Disclosure is discussed in more detail at the end of this commentary.

Being Prepared for Reporting:

In general, my advice is that corporate reporters should be prepared for using the GRI Standards to disclose much more information than the SASB Standards suggest.

For example, the GRI Standards by design suggest that a company should expect to report on every material ESG issue that affects the company, and the reporting in accordance with “Comprehensive” level reporting option prescribes a management approach (DMA) for every risk, opportunity, and topic mentioned in the issuer’s report. In comparison, SASB suggest a well-defined and narrower set of [material] data and suggests management approaches for just a few topics, such as water management risk.

Other Differences to Note:

The GRI Standards Disclosures have an entire section on economic issues; the SASB Standard does not. These issues are focused on the economic value generated, financial assistance received from the government, and benefit plan contributions. The GRI Standards also ask about anti-corruption practices and anti-competitive behavior (in the “Society” subcategory), which the SASB Standard does not.

The GRI Standards suggest more detailed information in general than the SASB Standard on environmental topics, but the SASB Standard’s suggested disclosures are at times more specific and are on the whole more industry-specific. The main environmental topics both standards deal with are energy, water, greenhouse gas (GHG) emissions, waste, and biodiversity.

The GRI Standards suggest information on an organization’s energy consumption, energy intensity, and reduction in energy consumption and requirements — in addition to the suggestion that at least one or all, depending on individual company’s materiality assessments, of the ESG issues — be discussed and a management plan provided for it. including energy issues.

In contrast, the only energy information the SASB standard asks for is how much total energy is consumed, and suggests a breakdown of that energy by grid electricity and renewable energy (where the GRI Standards do not).

Overlaps and Differences – E/Environmental:

The water disclosures for GRI and SASB do overlap a great deal – SASB even suggests discussion of water-related risks and management approaches; notably, use of the SASB Standards suggests companies to report water specific non-compliance incidents where GRI Standards has a disclosure which asks for the companies approach for environmental compliance overall.

In terms of the other three topics, SASB only suggests disclosure of Scope 1 GHG emissions, of the amount of animal waste generated, and of the percentage of pasture and grazing land managed to Natural Resources Conservation Service (NRCS) conservation plan criteria in the biodiversity section.

GRI suggests much more information for all three of these topics (because the GRI Standards are general, they ask about waste only in general terms, but they do suggest disclosure of types of waste generated).

However, SASB suggests disclosure of management approaches for GHG emissions and waste management, whereas GRI suggests disclosure of management approach for each GRI topic considered to be material to the company. The NRCS conservation plan can also be considered as part of a management approach.

Using the GRI Standards For Reporting – More Detailed

GRI is more detailed – by far – than SASB in its suggested disclosures related to employees and their human rights; GRI Standards ask about benefits, labor-management relations, training and education, gender pay equality, diversity and equal opportunity, non-discrimination, forced or compulsory labor, human rights training for security personnel, and grievance mechanisms in addition to employee health and safety — which is the only employee-related topic mentioned in SASB Standards.

SASB Standards, do, however, suggest a description of how respiratory health conditions (a problem in animal feedlots) are managed and prevented, an issue which is much more industry-specific and not specifically mentioned even in the GRI G4 Food Processing Sector Disclosures.

GRI also asks many questions about a company’s product responsibility and impact on society, whereas SASB does not.

Addressing “S” — Social Issues

The social issues GRI Standards ask about are indigenous rights (in the “Human Rights” subcategory); contributions to and effects on local communities; anti-corruption, anti-competitive behavior; consumer privacy and health and safety; compliance; marketing, labeling; and, grievance mechanisms for effects on society. SASB Standards focus on food safety. (Note that the GRI Standards suggests a discussion of markets that ban imports of the company’s products, which is often a food safety issue for the meat, poultry, and dairy industry. SASB Standards address this under the “Food Safety” section; other food safety topics are covered in the G4 Sector Disclosures.)

About Supply Chain Content

Both GRI and SASB Standards address disclosures on supply chain information — the information suggested by SASB Standards specifically address biodiversity, animal welfare, water stress, and climate change resilience in the meat, poultry and dairy supply chain (including discussion of plans to manage climate change risks and opportunities in the supply chain). These are of course all very important issues in the meat, poultry and dairy sector.

GRI in comparison suggests more general information about screening for environmental and social issues and local suppliers. (The Sector Disclosures address in general terms, supplier compliance with sourcing policies and international standards.)

The G4 Food Processing Sector Disclosures — which are the closest equivalent to the SASB Meat, Poultry & Dairy standards — suggest additional information in many sub-categories, such as product safety, and additional guidance for many aspects. (For example, it is noted that financial assistance from government may marginalize small-scale producers and have negative impacts on public health.)

The GRI Sector Disclosures also add information on sourcing practices to the procurement practices section (as discussed in the previous paragraph) and two new sections in the “Society” subcategory, on healthy and affordable food (which SASB does not mention) and animal welfare.

The GRI Sector Disclosures’ food safety questions relate to markets that ban the company’s products and the percentage of food manufactured in facilities accredited by a third party for food safety. SASB has more questions, including about recalls, and does ask about one third-party certification system, the Global Food Safety Initiative (GFSI).

Focus on Food Issues

The GRI Sector Disclosures also have sections on nutrition — specifically, on fortified foods and food reduced in saturated and trans fats, sodium, and added sugars – and marketing and labeling, especially marketing to vulnerable groups like children and pregnant women.

The SASB Standard does not address these issues. However, other than dairy products, most animal-based foods are not fortified with nutrients or reduced in fat, sodium, or sugar, perhaps making the GRI Sector Disclosures in this area of little relevance to the meat, poultry and dairy industry specifically.

In conclusion, I see the SASB Standard and the GRI Standards + G4 Food Processing Sector Disclosure each covering most of the environmental, social, and governance (ESG) topics relevant to the livestock industry, and together, the GRI and SASB standards fill in each other’s gaps to create a more complete ESG profile for any given company in the industry/sector.

Because some pieces of information are in differently-named categories across the standards, responding in the corporate reporting process to both standards does take a little extra work — but is very much possible and I think beneficial to do if the company seeks to be a sustainability leader in the industry (or industries) in which it operates.

Note:  This commentary is part of a series sharing the perspectives of G&A Institute’s Analyst-Interns as they examine literally thousands of corporate sustainability / responsibility reports.  Click the links below to read the first post in the series which includes explanations and the series introduction as well as the other posts in the series:

1st in Series: The Software / IT Services Industry – GRI & SASB Standards In Focus – Perspectives on Alignments & Differences

2nd in Series: The Agriculture Products Industry — GRI & SASB Standards In Focus – Perspectives on Alignments & Differences

3rd in Series: The Electric Utilities & Power Generators Industry – GRI & SASB Standards In Focus – Perspectives on Alignments & Differences

3rd in Series: The Electric Utilities & Power Generators Industry – GRI & SASB Standards In Focus – Perspectives on Alignments & Differences

By Jess Peete – G&A Institute Sustainability Report Analyst Intern

It is often the case that many us may not give our monthly energy utility company a second thought — unless there is an issue with the power going out or the bill is too high.

However, for those of us working in the sustainability field, the Energy Utilities Industry is one of the most important industries to consider, regardless of where we live or do business.

This industry’s companies power our homes, power our businesses, and in so many ways power our modern lives.

Traditionally, the energy utilities & power generators industry relied on oil and coal to generate supply for the power grid. This historic reliance on fossil fuels has more recently become a major issue in focus for investors, and society, as the effects of climate change continue to grow and the impact of burning fossil fuels for energy become more apparent.

Because of these effects on the environment and atmosphere, the Energy Utilities and Power Generators sector is today considered “high impact”.

Key sustainability reporting frameworks – including the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) — have sector-specific reporting standards (GRI has supplemental guidance that goes beyond their regular reporting requirements in order to more accurately measure the societal impact of the industry.)

Similarities and Differences in Standards

I’ve found that there is a great deal of similarity in the GRI Sector Supplements and SASB Industry standards for the Energy Utilities and Power Generation industry — but there are distinct differences as well.

The sector supplements only exist for GRI-G4, however, it is still advised for reporting organizations to now use the GRI Standards and incorporate the sector-specific disclosures from the GRI-G4 energy sector supplement to establish a more thorough industry-specific review of the total impact of the energy utilities sector.

The SASB Standards

SASB defines the materiality for the Energy Utilities sector reporting to include the following topics:

ENVIRONMENT

  • Greenhouse Gas Emissions & Energy Resource Planning
  • Air Quality
  • Water Management
  • Coal Ash Management

SOCIAL CAPITAL

  • Community Impacts of Project Siting

HUMAN CAPITAL

  • Workforce Health & Safety

BUSINESS MODEL AND INNOVATION

  • End-Use Efficiency & Demand

LEADERSHIP AND GOVERNANCE

  • Nuclear Safety & Emergency Management
  • Grid Resiliency
  • Management of the Legal & Regulatory Environment

Overall, the SASB standards appear to me to be quite comprehensive for a company to follow for their reporting — and would require reporting for many aspects of the electric power grid, including overall energy supply chain impacts.

For instance, SASB requires a calculation of Greenhouse Gases (GHG) emitted related to operations — but also requires a qualitative reporting of management-level planning to reduce the GHG emissions (emitted both from the company and its customers).

SASB addresses this in terms of recommending corporate reporting on negative environmental impacts — such things as coal ash and potential hazards such as posed by nuclear plants.

The GRI Standards

There appears to be little to no mention of coal ash storage in the GRI Standards — unless a company chooses to include coal ash as effluence.

This type of reporting could also be included in a company’s disclosure of their management approach (DMA) in the GRI Standards Report.

One area where the GRI standards seems to have a stronger “urging” for corporate reporting is the Sector impact on water, which is incredibly important because the energy utilities sector is one of the biggest users of water (usually required for cooling).

GRI Standards, in this case, appear to take a more holistic approach to water consumption (measuring total stress) while SASB only requires reporting the water impact from high stress areas.

Conclusion:

Because of the high impact that energy production and distribution have on climate, local communities, and the economy, companies in the Sector using both the GRI Standards and GRI G4 Energy Supplement alongside the SASB Energy Utilities Sector Supplement will be able to create a sustainability report that measures the true impact and costs of operations.

Measuring and managing these material E&S issues can help to provide both companies and investors in the sector a better understanding of their businesses, and a clear pathway to keeping consumer costs low while shifting to an energy portfolio that is one more based on sustainable energy.

Note:  This commentary is part of a series sharing the perspectives of G&A Institute’s Analyst-Interns as they examine literally thousands of corporate sustainability / responsibility reports.  Click the links below to read the first post in the series which includes explanations and the series introduction as well as the other posts in the series:

1st in Series: The Software / IT Services Industry – GRI & SASB Standards In Focus – Perspectives on Alignments & Differences

2nd in Series: The Agriculture Products Industry — GRI & SASB Standards In Focus – Perspectives on Alignments & Differences

4th in Series: The Food Industry – GRI & SASB Standards In Focus – Perspectives on Alignments & Differences

2nd in Series: The Agriculture Products Industry — GRI & SASB Standards In Focus – Perspectives on Alignments & Differences

By Emilie Ho – G&A Institute Sustainability Report Analyst Intern

During my analysis, I found that although many of the material disclosures that the SASB Standards suggest for disclosure by the Agriculture Products Industry are in line with the GRI’s Topic Disclosures, there are also a number of material topics that SASB advances for disclosure that do not have a related disclosure under the GRI Standards.

Interestingly, some of the material disclosures that do share overlap also have differences in what the two reporting frameworks suggest companies include in their sustainability reports. (Note that in the United States, use of both standards is voluntary for corporations.)

This commentary will explore some of these similarities and gaps between SASB and GRI to help corporate reporters better understand how these standards can be utilized for a company in the Agriculture Products Industry to report their environmental, social, and economic impacts more effectively.

At first glance, I found that the GRI Standards appear to seek more in-depth disclosures for some topics that they share in concept with the SASB Standards — but as a whole, the SASB Standards provide a more comprehensive view of agricultural practices due to the industry-specific disclosures and components suggested in its recommendations. These are not covered in as much depth under the GRI Standards.

As an example, SASB and GRI both include Greenhouse Gas (GHG) Emissions as an area for disclosure, and the disclosure of GHG emissions suggested by the two Standards’ organizations both account for Scope 1 emissions and biogenic carbon dioxide emissions.

Similarities and Differences to Consider

However, although SASB asks agricultural organizations to describe their long-term and short-term strategies of managing Scope 1 emissions and emission-reduction targets—something that is not specifically outlined under the GRI’s Emissions Topic Disclosure — GRI does suggest organizations that choose to report on emissions include a management approach that is used to cover components such as the policies, commitments, and goals and targets as they relate to the reporting organization’s emissions.

GRI expects reporting organizations to provide a management approach disclosure (otherwise known as the DMA) for every material topic chosen, or else explain why the management approach was not included at the time of reporting.

While the discussion encouraged by the GRI’s DMA is similarly suggested for some of the topics covered by SASB, it is not found in the SASB’s emissions materiality topic. Many of the industry-specific disclosures included in SASB could thus be improved by being covered using this management approach section of the GRI.

Emissions and Energy Related Disclosure

The GRI Standard’s Emissions Topic Disclosure also has more topic-specific components available for reporting — such as Scope 2 and Scope 3 GHG emissions, emissions of ozone-depleting substances, and other significant air emissions.

In this way, the GRI Standards would appear to be more comprehensive for the emissions materiality topic that it shares with SASB.

The same observation is found in Energy, which is also available as a material topic under SASB and a disclosure topic in the GRI Standards.

SASB Standards suggest reporting organizations disclose their consumption of operational energy fleet fuel — both of which are also covered under GRI’s topic-specific categories of energy consumption within and outside of the organization.

Both GRI and SASB also account for the amount of energy reduced through the use of renewable energy.

However, GRI Standards additionally ask reporting organizations to disclose their energy intensity and the reductions in energy requirements of sold products and services achieved during the reporting period.

Since this topic will be coupled with a management approach under the GRI, the organization’s Standards would appear to cover more ground than SASB Standards in the Energy topic disclosures, since this discussion is not required for the Energy material topic under SASB — however, the company could choose to disclose it in the DMA section.

Addressing Labor/HR Issues

Suggested disclosure content that relates to labor is also more extensive under GRI than SASB.

SASB Standards cover Food Safety and Health Concerns as it relates to the number of recalls issued and strategies used to manage genetically modified organisms (GMOs) and Fair Labor Practices and Workplace Health and Safety (as it pertains to whether farms are certified for fair labor practices, the data on injury rates, and how to assess, monitor and reduce exposure of employees to pesticides).  In comparison, the GRI Standards offer 19 available Social topics for companies to report on.

In particular, the labor/management relations and occupational health and safety topic specific disclosures share some overlap with those of SASB.

These topic-specific disclosures under the GRI Standards also suggest that companies report on hazard identification, risk assessment, promotion of worker health, prevention and mitigation of occupational health and safety impacts, and work-related injuries.

Agriculture-Specific Issues

SASB does take a more agriculture-focused approach because it asks specifically for data on topics such as recalls, GMOs, and farms certified for fair labor practices; these are not similarly asked for under the GRI Standards.

The Land Use and Ecological Impacts, Climate Change Impacts on Crop Yields, and Environmental and Social Impacts of Ingredient Supply Chains material issues identified by SASB are other examples where SASB takes a more comprehensive approach to reporting for the Agricultural industry’s specific issues.

These SASB Standards disclosures ask organizations to report on topics such as the amount of crop yields/lost, percentage of agricultural raw materials certified to third-party environmental/social standards, amount of pesticide consumption by hazard level, and volume of wastewater reused/discharged to the environment.

The available disclosures following the GRI Standards do not appear to directly encompass these agriculture-specific components (even in the GRI Food Processing Sector Supplement), making GRI reporting as a whole appear to be not as comprehensive for the Agriculture sector — despite GRI requiring more detail for those disclosures that do intersect with SASB.

Agricultural organizations that choose to report without following SASB Standards and / or the Food Processing Sector Supplement may, therefore, result in a more restricted view of those organizations’ agriculture-specific practices — despite them being in line with GRI Standards reporting.

My Conclusions

Moving forward, corporations in the Agricultural sector can improve their sustainability reports by using both the GRI Standards and the SASB Standards for the collection, measurement, analysis and reporting of their environmental, social, and economic data.

This integrative approach to reporting would enable corporations to create a much more comprehensive sustainability report, by allowing the enterprise to take advantage of both SASB’s industry-specific disclosure recommendations and GRI’s broader topic-specific recommendations.

# # #

Note about GRI’s Sector Disclosure — from the GRI’s website FAQ: “With the transition from G4 Guidelines to GRI Standards, the G4 Sector Disclosures remain valid. The use of the G4 Sector Disclosures is recommended for organizations using the GRI Standards, but is not a requirement for preparing a report in accordance with the Standards (see GRI 101: Foundation, Section 2 for more detail).”

Note:  This commentary is part of a series sharing the perspectives of G&A Institute’s Analyst-Interns as they examine literally thousands of corporate sustainability / responsibility reports.  Click the links below to read the first post in the series which includes explanations and the series introduction as well as the other posts in the series:

1st in Series: The Software / IT Services Industry – GRI & SASB Standards In Focus – Perspectives on Alignments & Differences

SERIES INTRODUCTION 
GRI & SASB In Focus – Perspectives on Alignments & Differences

Notes from the G&A Institute Team on the series of commentaries by members of the G&A Sustainability Report Analyst Interns…

With the recent publication of the much-anticipated “Report on US Sustainable, Responsible and Impact Investing Trends 2018” issued by US SIF showing that ESG has really hit the capital markets’ mainstream — with $1-in-$4 in the US (by professional investment managers now incorporating ESG).  And, with the recent petition urging mandatory ESG reporting — submitted to the Securities & Exchange Commission by institutional investors  — he need to develop a more standardized framework for corporate ESG reporting is more pressing than ever before.

A recent discussion paper — “Investor Agenda For Corporate ESG Reporting” — with inputs from the CFA Institute, ICGN, PRI, CERES, GSIA, GIIN, and the UNEP-FI — further highlights this issue.

Among other things, the discussion paper emphasizes the need for participants of the Corporate Reporting Dialogue (participants include reporting standard setters – GRI, SASB, CDP, IIRC,CDSB, ISO, FASB, and IFRS) to deliver on their promise to work together to develop a more unified agenda on ESG reporting.

As part of our company’s role as the GRI Data Partner in the USA, UK and Republic of Ireland, G&A Institute’s Sustainability Report Analyst-Interns analyze thousands of sustainability reports each year and contribute the information to the GRI’s Sustainability Disclosure Database. This is the largest publicly-accessible sustainability disclosure database in the world (with now over 50,000 sustainability reports included, dating back to the start of the GRI).

Many of the corporate reports the G&A analysts process use the GRI Standards — and a number have now started to implement aspects of the SASB Standards as well in their disclosure and reporting process, depending on their sector and industry categories.

In their ongoing work, G&A’s Sustainability Report Analyst-Interns have been comparing the two standards for disclosure in specific industries as they carefully examine the corporate reports, and consider two standards’ alignment, similarities and differences.

In this series G&A’s Sustainability Report Analyst-Interns share their own perspectives as they have analyzed reports and noticed similarities and differences.

* * *

We begin our series of shared perspectives with the perspectives of Minalee Busi, looking at the Software and IT Services Industry.

Comments by Minalee Busi – G&A Sustainability Report Analyst-Intern

Discussion regarding sustainability reporting is usually more focused in context of resource intensive industries, and the Software and IT Services sector is often left out.

With sustainability being a major factor in competitive advantage and investor decision-making, Software and IT Services companies need to re-think their sustainability reporting strategies, if they are not already at that point.

SASB identifies a limited number of material issues for the industry for corporate reporting, such as:
• environmental footprint of hardware infrastructure,
• data privacy and freedom of expression,
• data security,
• recruiting and managing a diverse skilled workforce, and
• managing systematic risks from technology disruptions.

Environmental Disclosures

The disclosure suggestions set forth by both the SASB and GRI Standards are in fact quite comparable, and in alignment with each other for some topics.

For example, both standards suggest companies to report on the energy consumed (both renewable and non-renewable) — but with different reporting boundaries.

SASB suggests reporting consumption within the organization — and the GRI Standards ask to additionally include consumption outside of the company.

However, GRI Standards also include disclosures in terms of energy reduction due to conservation and efficiency initiatives — which SASB disclosures do not include.

Similarly, though both the disclosure frameworks require information about water withdrawal and consumption, GRI also expects detailed reporting on water discharge into different water bodies, with information such as whether water was treated before discharge and whether they follow international standards on discharge limits.

The GRI Standards also include disclosure on recycling — which although not very comprehensive, is completely non-existent in the SASB sector disclosure.

Given the increasing e-waste generated by the IT industry, both GRI and SASB could consider including more detailed disclosures in this area for addressing material risks companies face.

Addressing Data Security/Privacy

In terms of data security, both standards include suggestions of disclosures related to data breaches and the number of users affected. But since SASB disclosures are designed to be industry-specific standards, more detailed reporting requirements in terms of data privacy and freedom of speech are found in SASB — including information on secondary usage of user data and monetary losses as a result of legal proceedings associated with user privacy.

Other such additional detailed areas of sector-/industry-specific disclosures by SASB which are not specified in the GRI standards are topics under managing systematic risks — such as performance issues, downtime and service disruptions due to technological impediments; and, activity metrics related to data storage, processing capacity and cloud-computing.

Disclosures with respect to monetary losses due to legal proceedings around intellectual property protection and competitive behaviour can also be found in the SASB Standards.  These disclosures can be loosely be aligned with the GRI disclosures under non-compliance with laws in the socio-economic arena.

S/Social Reporting

With respect to the “S” (social domain) of corporate ESG reporting, both of the standards suggest reporting on employee diversity, with GRI focusing on categories such as age, gender and minority representation and SASB additionally suggesting reporting on data related to the percentage of employees who are (1) foreign nationals and (2) located offshore.

Interestingly, although SASB disclosures are industry specific standards and the IT industry is mainly dependent on human and intellectual capital, there is no specific suggestion of reporting on training and education of employees.

GRI Standards appear to be filling this gap with suggestions of detailed disclosures on average training hours, upskilling and transition assistance programs and information related to employee performance reviews.

Sustainability Reporting Criteria

The GRI Standards have extensive sustainability reporting criteria, of which a major portion of the disclosures fall under the “General Disclosures” — which include materiality, measurement approaches, consistency and comparability of reporting, external assurance, supply chain information, sustainability strategies, and ethics and integrity. This to me is seemingly more transparent as compared to the SASB Standards.

Another such area is stakeholder engagement, which exists in the SASB Standards only in the form of percentage of employee engagement.

The category of Discussion and Analysis under SASB Standards does require reporting on strategic planning about each of the material topics identified, which can be mapped to the Management Approach (DMA) disclosures recommended under each material Topic-specific disclosure area of the GRI Standards.

Alignment – and Gaps

With the above overview, the SASB disclosures and GRI Standards can be seen in alignment with respect to some material topics while having some gaps in others.

However, since both the standards are developed to address the needs different stakeholders – with GRI aiming a broader set of stakeholders and the SASB majorly targeting mainstream U.S. investors — they should not be seen by report preparers as being in competition with each other.

I believe that the efforts of the CDP and important sustainability reporting standards-setters such as GRI and SASB will certainly be welcomed by companies and other stakeholders now struggling to keep up, but the question remains if such collaborations can ultimately lead to the desired standardised sustainability reporting framework that many investors actively seek.

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Note:  This commentary is part of a series sharing the perspectives of G&A Institute’s Analyst-Interns as they examine literally thousands of corporate sustainability / responsibility reports.  Click the links below to read the other posts in the series:

The State of Sustainable / ESG Investment in 2018: The State of Corporate Sustainability Reporting & How We Got Here

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

In this issue of our weekly newsletter we brought you two important Top Stories that capture the state of sustainable investing from varying points-of-view. 

We selected these research efforts for their value to both corporate managers and investment professionals.

  • Corporate staff can use the findings to “make the case” upward to C-suite and boardroom using both documents.
  • Investors not yet on board with Sustainable / ESG investing can gain valuable insights from both reports.

First is the report by Guido Giese and Zoltan Nagy at MSCI – “How Markets Price ESG” – addressing the question “have changes in ESG scores affected market prices?”

MSCI examines the changes in companies ESG scores, “ESG momentum” — either strong or negative for the companies being rated. Using the firm’s model, the research showed that markets reacted “most sensitively” to improvements in a public company’s characteristics rather than to declines in ESG performance, among many other takeaways in the full report.

The takeaway is that changes in ESG profiles of companies certainly affect company valuations.  The change in ESG characteristics showed the strongest move in equity pricing over a one-year horizon compared to shorter or longer time frames.  The report contains a well designed, thorough methodology which clearly demonstrates the importance of a public company’s ESG profile.

The MSCI score, the authors point out, is a proxy for the ESG-related information that the market is processing. (All MSCI ESG scores are updated at least once a year.)  There’s good information for both corporate managers and investment professionals in the 25-page report.

The second report is a snapshot of the “State of Integrated and Sustainability Reporting 2018” — issued by the Investor Responsibility Research Institute (IRRCI)Sol Kwon of the Sustainable Investments Institute (Si2) is the author and colleague Heidi Welsh is editor.  (IRRCI and Si2 regularly publish research reports together.)

The report charts the evolution of corporate sustainability reporting, which got off to a modest start in the 1980s – then on to the 1990s when corporate sustainability reports as we know them today as investors and companies adopted ESG or Triple Bottom Line approaches.

Key:  Another transition is underway, writes author Kwon, the “value creation” (a/k/a shared value) which should lead to more holistic reporting of inputs and outputs…and the emergence of the integrated report.

In 2013, IRRCI had Si2 look at the state of integrated reporting among the S&P 500® companies and examined practices again for this year’s report.  (The earlier work focused on what companies were reporting without regard to status as “mandated” or “voluntary” disclosure.)  Much progress has been made – for one thing, investor attention on ESG matters is much higher today…making corporate sustainability reporting ripe for the next phase.

The details are set out for you in the IRRCI report including trends and examples in use of reporting frameworks (GRI, SASB, IIRC), Quality, Alignment with SDGs, Inclusion of Sustainability in Financial Reports, Investor Engagement / Awareness, Board Oversight, Incentives, and many other important trends.

This an important comprehensive read for both corporate managers and investment professionals, with a sweep of developments presented in an easy-to-read format.

Example:  What drives ESG integration into investment strategy?  The drivers are identified and presented in a graphic for you.

Important note for you regarding IRRCI:  in 2019 the organization’s intellectual properties will be assumed by the Weinberg Center at the University of Delaware.  The center conducts research and holds conferences on corporate governance and related issues and is headed by Charles Elson, one of the most highly-regarded thought leaders on corporate governance in the U.S.

Important Study on ESG Momentum by MSCI: 
https://www.msci.com/www/research-paper/how-markets-price-esg-have/01159646451

State of Integrated and Sustainability Reporting 2018:
https://irrcinstitute.org/wp-content/uploads/2018/11/2018-SP-500-Integrated-Reporting-FINAL-November-2018.pdf

The FSB Task Force (TCFD) on Climate-Related Financial Disclosure And The Dramatic Contents of the Intergovernmental Panel on Climate Change – Hot Topics

A Brief Checklist of the Discussion for You This Week…

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

The Intergovernmental Panel on Climate Change (IPCC) was organized by the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) in 1988 (30 years ago!) to provide a “clear scientific view of the current state of knowledge in climate change and its potential environmental and socio-economic impacts”.

In the late 1970s, the discussion about climate change and global warming began to, well, pardon the pun – heat up!  Foreign Affairs magazine, in 1978 posed the question:  “What Might Man-Induced Climate Change Mean?”

“The West Antarctica Ice Sheet and CO2 Greenhouse Gas Effect” appeared in the authoritative publication, Nature in the same year.  The debate was on — and multi-lateral organizations and governments began to take note and respond. Ten years later the IPCC debuted on the global scene.

Over the years since there have many meetings and studies produced, with 195 countries eventually joining the IPCC membership.  Including, significantly, China, the USA, the United Kingdom, the Russian Federation, Germany, France, Italy, Ireland, Israel… and many other sovereigns. The membership list is here: http://www.ipcc.ch/pdf/ipcc-faq/ipcc_members.pdf

Thousands of scientists – subject matter experts – regularly participate in the work of the organization, which is typically around task forces and delving into specific issues.  This gives the IPCC findings and recommendations “a unique opportunity to provide rigorous and scientific information to decision-makers”. The work is policy-relevant but also policy-neutral and never policy-prescriptive.

In October 2018 the IPCC issued a Special Report on Global Warming of 1.5C (above pre-industrial levels) and the rising threat of climate change, as well as sustainable development (think of the SDGs) and efforts to wipe out poverty.

The report and related materials are here for you: http://www.ipcc.ch/

Our Top Story comes from our colleagues at Ethical Corporation, authored by Karen Luckhurst.  She reports on the related activities during a two-days of  meetings at which the FSB’s Task Force on Climate-Related Financial Disclosure (TCFD) recommendations and the  IPCC Special Report were analyzed and discussed by corporate and organizational leaders.

She shares with us 10 top takeaways from the TCFD discussions and includes the comments on key players – Richard Howitt, CEO of the IIRC; Susan Beverly of Abbott; Richa Bajpai of Goodera; GRI’s Pietro Bertazzi (head of sustainable development); Laura Palmeiro of Danone; Professor Donna Marshal at USC College of Business; Mark Lewis at Carbon Tracker; Katie Schmitz Eulitt of the Sustainable Accounting Standards Board; Mairead Keigher of NGO Shift (human rights organization); Daniel Neale at Corporate Human Rights Benchmark; Craig Davies at EBRD (investments); and Andre Stovin at AstraZeneca.

Richard Howitt of IRRC told the group that there is a major alignment soon to be announced with other reporting standards agencies (GRI, CDP) – watch for that.

Do read the Top Story this week.  And, mark your calendars – the Ethical Corp “Responsible Business Summits” are coming to San Diego, CA on November 12th; to New York City on March 18, 2019 and on to London for June 10th convening.  There is more information at:http://www.ethicalcorp.com/events.

Governance & Accountability Institute has been a long-term event media partner of Ethical Corporation events for going on 8 years.

This Week’s Top Story

Ten takeaways from the Sustainability Reporting and Communications Summit
(Tuesday – October 16, 2018) Source: Ethical Corp – Reporting on the SDGs, alignment between reporting standards, and the Task Force on Climate, Climate-Related Financial Disclosure were big topics during two days of high-level discussion…

Seven Compelling Corporate Sustainability Stories For You – How Entrepreneurs Are Managing Their Sustainable Business and Meeting Society’s Needs

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

How do we structure a more sustainable (and responsible) business – it’s a question we are regularly asked here at G&A Institute. By big firms and small companies — publicly-traded or privately-owned (and numerous planning to go public).

As we get into the conversation, what often becomes clear is that the company really was founded to meet some kind(s) of societal need, and sometimes it actually created a need (think of the popularity of the Apple eco-system or the early days of the Ford Motor Company and the “horseless carriage”) that it fills, benefiting society.

And in the firm’s “growing up and maturing” phase the leaders want to be recognized as a sustainable and responsible enterprise.

There are well-known corporate models that can help point the way for a management team.  We explain the successes of our “top performers and reporters” roster as examples of how the industry leaders (depending on sector and industry) have achieved clear, recognized leadership in sustainability. Their stories are inspirational as well as instructive.

(Tip:  read the companies’ GRI reports for a deep dive into corporate strategies, programs, collaborations, and achievements – our team dives into 1,500 corporate reports and more each year in our work as GRI Data Partners for the USA, UK and Republic of Ireland.)

But what about smaller enterprises, not “giants” in their industry, or niche players, run by talented entrepreneurs and managers who want to do the right thing as they build their business?  How do we find their stories?

You know, like the early story of Ben & Jerry’s (ice cream), two young guys with borrowed money operating a small store (a renovated gas station) in downtown Burlington, Vermont; the founders, Ben Cohen and Jerry Greenfield, built their business as a pioneer in social responsibility. (In 1985, the Ben & Jerry’s Foundation got 7.5% of annual pre-tax profits to fund community-oriented projects and supporting dairy family farming was a priority – like the duo’s support of Farm Aid.)

What we have for you today are the stories of seven perhaps less well-known firms briefly profiled by tech blogger Kayla Matthews in her guest commentary on the Born2Invest platform.  The quick-read profiles explain the companies’ business models and how they try to operate as sustainable enterprises.

These are: Prime Five Homes (building $1 million eco-mod homes in Los Angeles); LaCoste (marketing the well-known crocodile brand of clothing); Liberty Bottleworks (recycled water bottles); Cleancult (paving the way for more efficient detergents); Andean Collection (marketing jewelry from the rainforest and providing Ecuadorian women with jobs ); Blockchain (technology); Wash Cycle Laundry (eco-friendly local laundry service).

What is interesting is that each of the companies, the author explains, develop products and manufacturing processes that benefit employers, employees and Mother Earth by striving for and being (more) sustainable.  The stories are fascinating – and very appealing in this age of anxiety for many of us.

These stories remind us of the 2018 “Sense of Purpose” letter sent to public company CEO’s by Chairman and CEO Larry Fink, who heads the world’s largest asset manager, BlackRock. As a fiduciary, he explains, BlackRock engages with companies to drive the sustainable, long-term growth that the firm’s clients (asset owners) need to meet their goals.

And society, he explains to the CEOs receiving the letter, “…is demanding that companies, both public and private, serve a social purpose.”

To prosper over time, Mr. Fink wrote, “…every company must not only deliver financial performance but also show how it makes a positive contribution to society…without a sense of purpose, no company can achieve its full potential.”

You can read Larry Fink’s letter to corporate CEOs here – it well worth the read: https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter

You can follow Kayla Matthews on her tech blog, Productivity Bytes, where she often connects technology and sustainability topics: https://productivitybytes.com/

And do read our top story – it’s a fascinating and brief read to learn more about these innovative companies striving for greater sustainability and societal responsibility.

This Week’s Top Story

How 7 Eco-Friendly Businesses Are Changing The Sustainability Game
(Tuesday – September 11, 2018) Source: Born To Invest – To save the planet, it’s going to take cooperation from everyone, including both individuals and corporations. In fact, an increasing number of corporations are realizing that modern consumers are growing more environmentally…

Focus On The Corporate Sustainability Journey This Week – News & Opinion All Around the Topic in Various Communications Channels…

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

Remember the great Beatles’ song…Here, There and Everywhere?  That’s what seems to be happening with “Corporate Sustainability” these days.

The news and commentary seem to be everywhere now, with an examination of how the corporate sector is embracing the concept and developing strategies, action plans, assigning teams and moving forward to address ESG issues.

When we began our sustainability news, commentary and research sharing at Governance & Accountability Institute more than a decade ago, the items were few and far between, skimpy and more periodic than regularly appearing.

Today, a widening range of media and communications channels bring us the news of what the players in the corporate sector are doing — and how institutional investors and other key stakeholders are responding to same.

We see numerous news stories and commentary about what companies are doing in their sustainability journey…and how this matters in so many ways for the issuer (such as improved risk management, more effective investor relations, greater access to capital, enhanced reputation for recruiting and retaining human capital, preferred supplier status, and more).

G&A Institute is the data partner for the USA, UK and Republic of Ireland for the Global Reporting Initiative (GRI) and in this role, we gather and analyze (and then database) the corporate sustainability and CR reports of literally hundreds upon hundreds of companies.

The progress we’ve seen companies making in their journeys is encouraging and pretty astounding if you think back just 10 years or so (to the dark days of 2008).

And so as companies move ahead in the journey and greatly expand their disclosure and reporting, the communication channels light up with the “sustainability” news, commentary and research focused on a company, a group of peers, investors, an industry or a sector.

We selected a few examples for you this week.  First, from the food processing industry, an examination by Kevin Piccione (he describes his company’s effort – Sealed Air, an early sustainability adopter).

He cites the World Economic Forum finding that most “sustainable companies” outperform their peers by a third – but only 2% actually achieve or exceed their sustainability goals. So why do they succeed?  A brief review for you.

The second article for you is Harry Menear’s more in-depth piece from Energy Digital, examining which companies stand out for “green credentials”.

His focus is on the Corporate Knight’s “Top 10 Sustainable Companies” roster, which is drawn from comprehensive research on 6,000 companies worldwide across all industries (for companies with US$1 billion revenues).

The companies were scored on energy use, carbon, waste and clean air production, innovation expenditures, taxes paid, diversity of leadership, supply chain management, and other elements of the sustainability journey.  Which companies made the Top 10?  The link is below for your reading.

The third item is a note of caution from Bloomberg by Emily Chasan and Chris Martin — who point out that in the midst of the growing enthusiasm about corporate sustainability, there are some companies that investors call out for their “corporate greenwashing” (and they name names).  The authors cite the recent Ceres report on this (500 companies were analyzed).

They write:  Companies are still making questionable claims but accountability is rising.

Emily and Chris tell us companies (and their executives) are being forced now to admit to greenwashing (that is, “gushing” sustainability claims with a tenuous grip on reality).

Examined:  Mid-American; VW; Wal-Mart; Amazon; AB InBev SA.  There are perspectives shared on this by Calvert,  CalSTRS, BlackRock, Neuberger Berman, DWS Group, UBS.

And there are as always many items that our editors share this week in the Highlights, as we say, drawn for you from the many communications channels that our team monitors every day.  Let us know your thoughts as to how we are doing and what you would like to see!

This Week’s Top Stories

Achieving your sustainability goals does not mean sacrificing profits
(Thursday – August 16, 2018) Source: Food Processing – Nearly 90% of business leaders believe that sustainability is essential to remaining competitive and despite the clear link between sustainability and profit, only 2% of companies either achieve or exceed their sustainability…

Top 10 Sustainable Companies
(Monday – August 13, 2018) Source: Energy Digital – Which companies stand out for their green credentials? Energy Digital finds out.

Investors Are Increasingly Calling Out Corporate Greenwashing
(August 20, 2018) Source: Bloomberg – Corporate sustainability reporting has risen dramatically over the last few years, with 85 percent of the S&P 500 index producing annual corporate responsibility documents in 2018, up from just 20 percent in 2011, according to the Governance & Accountability Institute. That’s partially due to investor demand. Assets in sustainable investment funds grew 37 percent last year, according to data tracked by Bloomberg.

G&A Institute Research Results: 85% of the S&P 500® Index Companies Published Sustainability / Responsibility / CR / Citizenship Reports in 2017

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

One of the world’s most important benchmarks for equity investors is the S&P 500 Index®, a proprietary market-value weighted “basket” of the top stocks that represent about 80% of the U.S. equity markets according to the index owner, S&P Dow Jones Indices/McGraw Hill Financial.

Market Clout:  There are about US$8 trillion in Assets Under Management benchmarked to the index  – companies included in the index have a market-cap of US$6 billion or more (ticker:SPX).

More than six years ago the G&A Institute team decided to focus on the companies in the index to determine their level of (or lack of) ESG / Sustainability / CR / Citizenship disclosure and reporting.

Our first look-see was for year 2011 corporate reporting activities and after scouring the known sources  — each of the corporate websites, IR reports, printed reports, search engines results, connecting with companies and more —  we found just about 20% or about 100 of the large-cap index 500 companies were doing “something” along the lines of what we can describe today as structured reporting.  There were numerous brochure-type publications that did not qualify as a structured report of value to investors and stakeholders.

The GRI Was a Favored Framework – Then and Now
A good number of the early reporting companies were following the Global Reporting Initiative (GRI) framework for reporting guidance (that was for G3 and G3.1 at the time), and some perhaps had some other form of reporting (such as publishing key ESG performance indicators on their website or in print format for stakeholders); GRI’s G4 was later embraced by the 500.  And now we move on to the GRI Standards, which we are tracking for 2018 reporting by the 500.

This initial research effort was a good bit of work for our analyst team because many of the companies simply did not announce or publicize the availability of their sustainability et al report. (Some still do not announce, even in 2017 and 2018!)

The response to our first survey (we announced the results in spring 2012) was very encouraging and other organizations began to refer to and to help publicize the results for stakeholders.

We were pleased that among the organizations recognizing the importance of the work was the GRI; we were invited to be the data partner for the United States, and then the United Kingdom and the Republic of Ireland.  That comprehensive work continues and is complementary to the examination of the 500.

The 2011 Research Effort – Looking Back, The Tipping Point for Sustainability Reporting

Looking back, we can see that the research results were early indications of what was going on in the corporate and investment communities, as more asset owners and managers were adopting ESG / sustainability approaches, investment policies, engagement programs — and urging more public company managements to get going on expanded disclosure beyond the usual mandated financials (the “tangibles” of that day).

Turns out that we were at an important tipping point in corporate disclosure.

Investor expectations were important considerations for C-suite and board, and there was peer pressure as well within industries and sectors, as the big bold names in Corporate America looked left and right and saw other firms moving ahead with their enhanced disclosure practices.

And there was pressure from the purchasing side – key customers were asking their corporate supply chain partners for information about their ESG policies and practices, and for reports on same.  There was an exponential effect; companies within the 500 were, in fact, asking each other for such reports on their progress!

We created a number of unique resources and tools to help guide the annual research effort.  Seeing the characteristics and best practices of sustainability reporting by America’s largest and for the most part best-known companies we constantly expanded our “Sustainability Big Data” resources and made the decision to closely track S&P 500 companies’ public reporting — and feed the rich resulting data yield into our databases and widely share top-line results (our “Flash Report”).

The following year (2013) we tracked the 500 companies’ year 2012 reporting activities – and found a very encouraging trend that rang a bell with our sustainable investing colleagues:  a bit more than half of the 500 were now publishing sustainability et al reports.  Then in 2013, the numbers increased again to 72%…then 75%…then 81%…and now for 2017, we reached the 85% level.  The dramatic rise is clearly evident in this chart:

Note that there are minor annual adjustments in the composition of the S&P 500 Index by the owners, and we account for this in our research, moving companies in and out of the research effort as needed.

Louis Coppola, EVP of G&A Institute who designs and manages the analysis, notes:  “Entering 2018, just 15% of the S&P 500 declined to publish sustainability reports. The practice of sustainability reporting by the super-majority of the 500 companies is holding steady with minor increases year after year. One of the most powerful driving forces behind the rise in reporting is an increasing demand from all categories of investors for material, relevant, comparable, accurate and actionable ESG disclosure from companies they invest in, or might consider for their portfolio.

“Mainstream investors are constantly searching for larger returns and have come to the conclusion that a company that considers their material Environmental, Social, and Governance opportunities and risks in their long-term strategies will outperform and outcompete those firms that do not. It’s just a matter now of following the money.”

Does embracing corporate sustainability in any way impact negatively on the market performance of these large companies?  Well, we should point out that the annual return for the SPX was 22% through 12-13-18.   You can read more in our Flash Report here.

Thank you to our wonderful analyst team members who over the years have participated in this exhaustive search and databasing effort.   We begin our thank you’s to Dr. Michelle Thompson, D.Env, now a postdoc fellow supporting the U.S. Department of Energy in the Office of Energy Policy Systems Analysis; and her colleague, Natalia Valencia, who is now Senior Research Analyst at LAVCA (Latin American Venture Capital Association).  Their early work was a foundational firming up of the years of research to follow.

Kudos to our G&A Research Team for their significant contributions to this year’s research report:  Team Leader Elizabeth Peterson; analyst-interns Amanda Hoster, Matthew Novak, Yangshengling “UB” Qui, Sara Rossner, Shraddha Sawant, Alan Stautz, Laura Malo Yague, and Qier “Cher” Zue.

We include here a hearty shout out to the outstanding analyst-interns who have made great contributions to these research efforts in each year since the start of the first project back in 2011-2012.  It’s wonderful working with all of these future leaders!

The reports from prior years are posted on the G&A Institute website: https://www.ga-institute.com/research-reports/research-reports-list.html

Check out our Honor Roll there for the full roster of all of the talented analysts who have worked on these reports and numerous other G&A Institute research that we broadly share with you when the results are in.  Their profiles (which we work with our valued colleagues to keep up to date as they move on to great success in their careers) are on the G&A website: https://www.ga-institute.com/about-the-institute/the-honor-roll.html

Footnote:  As we examine 1,500 corporate and institutional reports each year we see a variety of titles applied:  Corporate Sustainability; Corporate Social Responsibility; Corporate Responsibility; Corporate Citizenship (one of the older titles still used by GE and other firms); Corporate Stewardship; Environmental Sustainability…and more!

If you would like to have information about G&A Institute research efforts, please connect with us via our website.