New York, NY – The rise in ESG/CSR/Sustainability Reporting among U.S. companies in the S&P 500 Index® and the Fortune 500® resulted in a dramatic increase from 2010 to 2011, according to an analysis released on December 17, 2012, by Governance & Accountability Institute.
The New York-based G&A Institute, which is the exclusive Data Partner for the Global Reporting Initiative (GRI) in the United States, the UK and Ireland, published its analysis – “”2012 Corporate/ESG/Sustainability/Responsibility Reporting – Does It Matter?””
G&A team members for the second year have been examining corporate sustainability and responsibility reporting trends by US-domiciled companies to explore the question – Does such reporting really matter? The research team began their research with these commonly-asked queries in mind:
- Regarding Financial Performance – Do companies that report perform better in the capital markets over the long term? Are there discernible share price (valuation) advantages for reporters?
- Equity Indexes – Are companies reporting on sustainability more likely to be included in such popular sustainability indexes as the Dow Jones Sustainability Index (DJSI) and NASDAQ OMX CRD Global Sustainability Index?
- Key Corporate Reputational Lists / Awards – Are reporting companies selected more often for credible reputational lists such as Newsweek’s Green Rankings?
- Key Corporate Ratings & Rankings – Are higher ratings and rankings achieved by reporting companies by leading organizations such as Carbon Disclosure Project (CDP)?
This year G&A Institute elected to concentrate on the universe of the S&P 500 companies (last year’s report focused on the Fortune 500 companies). G&A initiated the change partly in response to feedback from readers of the first report, and to better align the report with the most commonly-used benchmark, the S&P 500.
Top-Line Findings
- An increasing number of corporate managers and boards are recognizing the many benefits that measuring, managing, and disclosing their strategies and performance on Environmental, Social and Governance (ESG) factors can have for their companies.
- The increase in reporting among companies in the S&P 500 Index® and the Fortune 500® is dramatic from the prior year’s universe of reporters. For example, in last year’s analysis by G&A, 19% of the S&P 500 reported; in this year’s analysis 53% of S&P 500 companies reported. In 2011’s analysis, 20% of the Fortune 500 reported, in this year’s research effort, it was determined that 57% companies reported. The majority of companies that report in the S&P 500 and the Fortune 500 use the GRI Framework.
- Companies that report on their sustainability strategies, initiatives, programs and ESG performance appear to be more likely to be selected for key sustainability reputational lists, ranked higher by sustainability reputation raters and rankers, and, selected for inclusion on leading sustainability investment indexes (indices).
- Companies that are measuring and managing their sustainability issues appear to perform better over the long-term in the capital markets. We agree with readers providing feedback in 2011-2012 that evaluating a larger universe of companies over a longer period of time would be more definitive in this regard. (Obviously, there are many factors beyond sustainability and CSR reporting that influence capital market performance.)
G&A Institute underscored a significant takeaway from its report: Now that 53% of the S&P 500 and 57% of the Fortune 500 companies are reporting on their Environmental, Social, and Governance (ESG) impacts, for the first time the non-reporters are in the minority.
G&A Institute Chairman Hank Boerner observed, “”We believe this minority universe will continue to shrink as it has in the past few years as more large-cap companies embrace sustainability reporting. The benefits of sustainability reporting are becoming increasingly obvious over time and the long-term benefits of adopting sustainability strategies and reporting on performance become easier to measure and quantify.””
Louis D. Coppola, Partner and Senior Vice President at the Institute emphasized, “”The lesson for corporate management and boards: If you are not reporting, your competitors and peers almost surely are. The task of ‘catching up’ will only grow larger. And, those companies reporting for a longer period of time have a definable lead on their peers.””
Governance & Accountability Institute is the US Data Partner for the GRI, and also for the UK and the Republic of Ireland. Beginning with year 2011 reporting, the Institute has been collecting, analyzing and reporting on the trends in sustainability and responsibility reporting by US companies and the US-based subsidiaries of multinationals.
Primary researchers and authors of this year’s report were Lindsey Clark, Earth Institute of Columbia University, and David Master, Zicklin School of Business at Baruch College. Reviewers, editors and advisors were Hank Boerner, Chairman, and Louis D. Coppola, MBA, Partner.
Research partners sharing resources with the G&A Institute’s research team were: CSRHub and Bahar Gidwani (Principal), GetAYou (Investars); SAM Group (creators and managers of the DJSI); Bloomberg LLP’s (Rina Levy); CRD Analytics (principal Michael Muyot); Brandlogic and senior partner James Cerutti; and, the Global Reporting Initiative and Focal Point USA’s team leaders Mike Wallace and Marjella Alma.
Source: Governance & Accountability Institute, Inc.
About G&A Institute
Governance & Accountability Institute, Inc. offers a portfolio of resources to help detect, identify, monitor, analyze, and address critical issues related to Sustainability, Corporate Social Responsibility (CSR) and Sustainable & Responsible Investment (SRI). The Institute is an issues management, strategies, research, communication and advisory organization providing leaders in the investment, corporate, social, and public sector with services and tools related to Environmental, Social and Governance (ESG) issues. G&A Institute is the sole data partner for the Global Reporting Initiative (GRI) in the USA, UK and Ireland. For more information, visit www.ga-institute.com.
