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




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. 

Important Items for Your Attention: Editors' Sustainability Scans - Progress!

Sustainable businesses proving lucrative
(Monday - June 12, 2017) 
Source: Straits Times - More companies here are jumping on the lucrative sustainability bandwagon amid booming demand and opportunities for businesses that are both profitable and eco-friendly. 

CEO Perspective: On Sustainability  
(Tuesday - June 13, 2017) 
Source: UrbanLand - ULI has long supported and promoted sustainable development that conserves energy, land, and other natural resources. Our leadership in sustainability has never been driven by government regulations or policies.  

The sustainability agenda
(Tuesday - June 13, 2017) 
Source: Fresh Produce Journal - How can producers respond sustainably to food crazes and what is the consumer appetite for ethical produce? President of organic watchdog Ecovia Intelligence, Amarjit Sahota, chats to Nina Pullman 

Rainforest Alliance, UTZ Merge to Create Single Agriculture Sustainability Standard
(Tuesday - June 13, 2017) 
Source: Sustainable Brands - Two of the world’s leading sustainability certification bodies, Rainforest Alliance and UTZ have announced plans to merge later this year in an effort to simplify the certification process for sustainable agriculture.

Why sustainability teams should engage CFOs much earlier
(Wednesday - June 14, 2017) 
Source: GreenBiz - Who is driving corporate sustainability forward? David Lubin, co-founder and managing director of Constellation Research and Technology, shared his perspective on CFOs’ role in steering the wheel of these decisions. 

New Winds Of Sustainability And Responsible Business
(Wednesday - June 14, 2017) 
Source: Holmes Report - regulation, more and more relevant for organizations these days. Sustainability is no longer linked solely to philanthropy, but has shifted and is slowly gaining a strategic positioning, being considered from a holistic point of...  

3 benefits of environmental sustainability
(Wednesday - June 14, 2017) 
Source: Carbon Clear - shifting from sustainability as an afterthought to sustainability as best practice. McKinsey’s Sustainability’s Strategic Worth: Global Survey report found that CEOs are now twice as likely to cite sustainability as their top... 

4 big ideas for adjusting your sustainability strategy
(Thursday - June 15, 2017) 
Source: GreemBiz - Green initiatives have taken root in the corporate world. Rising numbers of companies have promised to cut emissions, protect forests and watersheds, reduce food waste and take other steps to ensure a sustainable future for all.... 

Sustainability leaders, note: There's no more room for silence
(Thursday - June 15, 2017) 
Source: GreenBiz - In early June, several CEOs declared their disagreement with President Donald Trump’s decision to exit the Paris climate agreement and announced their departure from his Strategic and Policy Forum. These CEOs represent companies... 

Triple Bottom Line Sustainability
(Friday - June 16, 2017) 
Source: American Libraries - Triple bottom line (TBL) sustainability is a framework that expands the realm of sustainability beyond the environmental to incorporate economic and social aspects. Let’s face it—a library that is doing everything right by the... 

Reconsidering the sustainability of hydropower
(Friday - June 16, 2017) 
Source: Greenbiz - Before it went belly up, the automotive brand Oldsmobile ran a series of TV ads saying, "This is not your father’s Oldsmobile," trying to shake off the stodgy image that the brand had come to represent. 


Our Focus This Week on A Range of ESG Topics & Issues -- Things to Think About..

Oil producer Norway bans use of heating oil in buildings
(Friday - June 16, 2017) 
Source: Reuters - Oil producer Norway will prohibit the use of oil and paraffin to heat buildings from 2020 as it tries to rein in domestic emissions of greenhouse gases, the government said on Thursday. 

Oil Extends Slump as U.S. Fuel Glut Leaves Market Disheartened
(Friday - June 16, 2017) 
Source: Bloomberg - Oil extended its decline to a seven-month low as rising American gasoline supplies raised doubts that a global glut is easing fast enough. 

How NASA's Satellites Can Help Solve The Middle East Water Crisis
(Monday - June 12, 2017) 
Source: NewsWeek - Ever since it was established in 1958, America’s national space agency has produced a raft of invaluable scientific data. From tracking melting glaciers to identifying mineral deposits, its efforts to accumulate enormous troves... 

In the wake of Gymboree's bankruptcy filing, here are the retailers that could be next
(Tuesday - June 13, 2017) 
Source: CNBC - Gymboree's filing for Chapter 11 bankruptcy protection has many retail industry watchers wondering who's next. With the record pace of bankruptcies in the industry this year, bankruptcy, for some, is becoming an issue of when the...

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News & Opinion: Asset Managers, US Pension Funds, Sovereign Wealth Funds

Five Facts About Sovereign Wealth Funds That Will Blow Your Mind
(Wednesday - June 14, 2017) Associated Profiles : Economic and Social Stabilization Fund & Pension Reserve Fund (Chile) 
Source: Business Insider - 2. Contributions were thinner in some sovereign wealth funds than usual. Chile’s Pension Reserve Fund, for example, was a victim of this situation. The government didn’t pony up the sort of capital it has in the past...

Nigeria: Discordant Voices Over Sovereign Wealth Fund
(Tuesday - June 13, 2017) Associated Profiles : Revenue Equalization Reserve Fund 
Source: AllAfrica - According to many estimates, Kuwait's fund is now worth approximately $300 billion. Another of the first registered SWFs is the Revenue Equalization Reserve Fund of Kiribati. Created in 1956 when the British administration of the...

Pension Funds in Illinois, NY Back Out of Hedge Funds  
(Tuesday - June 13, 2017) Associated Profiles : New York State Common Retirement Fund 
Source: Investopedia - The Illinois State Board of Investment and the New York State Common Retirement Fund have both cut back significantly on their hedge fund allocations, according to a report by Bloomberg. Neither of these two funds is the first to... 

News for You From the Corporate Sector

Facebook Outlines Its Strategy for Taking Down Extremist Content
(Friday - June 16, 2017) 
Source: NBC News - Facebook has been quietly using an arsenal of artificially intelligent tools to help identify and remove extremist content before it can be seen by the larger community, according to the company. 

Southwire Launches 2016 Sustainability Report
(Tuesday - June 13, 2017) 
Source: Triple Pundit - Building upon the company’s strong commitment to sustainability, Southwire recently launched its third report, written in accordance with the Global Reporting Initiative’s (GRI) G4 Guidelines Core option. This interactive, online... 

The 5 largest US banks are launching a Venmo 'killer'  
(Tuesday - June 13, 2017) 
Source: Business Insider - NY -The US banking industry is about to launch its answer to the popular mobile payments app Venmo, in what is likely to be the biggest change in years in how individuals exchange funds digitally. 

Jeffrey Immelt Set to Retire as General Electric Chief
(Monday - June 12, 2017) 
Source: NY Times - General Electric said on Monday that its chairman and chief executive, Jeffrey R. Immelt would retire at the end of the year in a leadership shift for the industrial giant, and be replaced by the top executive in its health care... 

EpiPen maker Mylan under fire for CEO’s $98 million pay package 
(Wednesday - June 14, 2017) 
Source: NY Daily News - EpiPen maker Mylan is under fire for paying its former CEO, Robert Coury, $98 million in 2016, a year when controversy over EpiPen price hikes caused the company’s market value to tumble. 

Verizon closes Yahoo deal, Mayer steps down
(Wednesday - June 14, 2017) 
Source: Reuters - Verizon Communications Inc (VZ.N) said on Tuesday it closed its $4.48 billion acquisition of Yahoo Inc's (YHOO.O) core business and that Marissa Mayer, chief executive of the internet company, had resigned. 

How Companies Actually Decide What to Pay CEOs
(Thursday - June 15, 2017) 
Source: The Atlantic - In 2014, 500 of the highest-paid senior executives at U.S. companies made nearly 1,000 times as much money as the average American worker, after taking into account salary, bonuses, and stock-based compensation. That discrepancy... 

HP reveals new sustainability goals 
(Thursday - June 15, 2017) 
Source: IT OroPortal - HP has unveiled plans to revolutionise the way it works to provide a range of environmentally friendly business practices. 

These are the 47 things Uber has agreed to do to change its company culture
(Thursday - June 15, 2017) 
Source: Business Insider - The recommendations focus on four key themes: trust, transformation, accountability, and the 'tone at the top'. Already, Uber's board has agreed unanimously to follow the suggestions, and CEO Travis Kalanick has taken a leave of...


Trump Administration News... Affecting Directions on Governance, Sustainability & Climate Change

Trump Administration Calls for Major Revamp of Wall Street Rules
(Tuesday - June 13, 2017) 
Source: Bloomberg - The Trump administration laid out its highly anticipated plan for overhauling bank rules, calling on the government to ease, though not eliminate, many of the strictures that were imposed on Wall Street after the financial crisis. 

Trump's Paris Decision: Let's Make a Deal (or Not)
(Friday - June 09, 2017) 
Source: Real Clear Politics - Most press coverage of President Trump’s announcement of U.S. withdrawal from the Paris climate accord missed the real story. The issue is not whether the planet is warming, and, if it is, whether the cause is human emissions of...

Sustainability Will Endure Despite Trump’s Approach, Experts Say
(Monday - June 12, 2017) 
Source: Environmental Leader - In the era of Trump, will the practice of sustainability remain a business priority? The answer is that 73% of companies expect their commitment to be the same while 21% plan to increase their involvement. Only 7.7% plan to.

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