Amid growing pressure from investors, America’s largest corporations are embracing sustainability reporting.
Nine in ten companies on the S&P 500 index, one bellwether of U.S. stock market performance, published sustainability, corporate responsibility or citizenship reports in 2019. That’s up from only 20 percent in 2011 and 86 percent in 2019, according to Governance & Accountability (G&A) Institute findings released this week. And companies are deploying significant resources to detail their environmental, social and governance (ESG) performance against a wide range of voluntary standards and frameworks utilized by investors, raters and rankers. Foremost among these are CDP (65 percent of reporters) GRI (51 percent), the U.N. Sustainable Development Goals (36 percent) and SASB (14 percent), G&A found.
Investors help spur sustainability reporting
What’s driving such a big shift in sustainability reporting in under a decade? The first and likely most important factor is investors. Pressure is growing on companies to manage ESG risk and harness related opportunity from across the investment spectrum. Half of all U.S. individual investors now practice sustainable investing, while 80 percent of institutional asset owners use an ESG lens in their investment process, according to surveys by Morgan Stanley.
Global asset management firms, in particular, are increasingly vocal in their demands for greater sustainability disclosure, especially on climate risk and impacts. BlackRock, for example, has voted against 53 portfolio companies so far this year that it judged to be making insufficient progress on integrating climate risks into both business models and disclosures. Chevron, ExxonMobil, Daimler and Volvo were among the culprits, and the investment giant has put a further 190 companies “on watch.”
Both BlackRock and State Street Global Advisors have urged public companies to use SASB’s reporting standards which focus on sector-specific material ESG issues.
Consumers and employees are engaged in ESG performance
More than ever, consumers and employees are also making purchasing and employment decisions with an eye to how brands behave on environmental and social issues. In a 2019 Fast Company survey of 1,000 employees at large U.S. companies, more than 70 percent said they were more likely to choose to work for an organization with a strong environmental agenda. And in recent months, workers have flexed their muscle at Facebook and Amazon over providing a platform for misinformation, inaction on climate change and working conditions, respectively.
