Corporate Sustainability Disclosure – On the Rise But Does the Disclosure Address What Investors Seeking?
G&A's SustainabilityHighlights (28.6.2017)
Corporate Sustainability Disclosure – On the Rise But Does the Disclosure Addr…
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.
