Even though the overall environmental and social disclosure rate among global companies has remained essentially unchanged over the last year, reporting using the framework introduced by the Global Reporting Initiative (GRI) continued its rise in the United States, and one out of three large US companies now adopt those guidelines.
Exceptional progress has also been made in the transparency of individual practices, such as anti-bribery and climate change. Specifically, 60 percent of companies reported having an anti-bribery ethics policy, an increase of 21 percentage points over last year.
Similarly, 19 percent of companies (up from the 9 percent recorded last year) included climate change risk disclosure in their most recent annual reports.
So reports The Conference Board Sustainability Practices Dashboard 2015, a comprehensive database and online benchmarking tool that captures the most recent disclosure of environmental and social practices by large public companies around the world and segments them by market index, geography, sector, and revenue group.
Sustainability Practices covers a total of 79 environmental and social practices, ranging from greenhouse gas emissions to water consumption and from labor standards to political contributions. It is the result of the collaboration between The Conference Board, Bloomberg, and GRI.
Sustainability Practices was inaugurated as a publication in July 2012 and became a web-based application in 2013, in response to growing demand from company directors, investors, financial analysts, and other stakeholders for comparative data in the sustainability field.
With the dashboard, users can view individual sustainability practices by segments and generate customized charts. The updated dashboard expands the analysis of the previous edition and introduces year-over-year comparisons to highlight notable trends in sustainability disclosure.
This year’s edition also features data on two new practices: the number of companies adopting executive compensation policies inclusive of long-term incentives of environmental, social, and governance (ESG) performance as well as the number of companies disclosing the presence of child labor policies.
“Seeing this data evolve year after year gives us insight into some of the nonfinancial issues that have gained most traction among the business community,” said Thomas Singer, principal researcher at The Conference Board and co-author of the study. “The dashboard is designed as a tool for companies to benchmark their disclosure and performance across some of the most important sustainability practices, and the addition of the historical dimension provides a measure of progress in the evolving field of nonfinancial disclosure.”
“Voluntary disclosure of environmental and social practices has opened a window into the largely unfamiliar reality of corporations committed to all of their stakeholders, not only investors,” said Matteo Tonello, managing director of corporate leadership at The Conference Board. “Systematically collecting and making sense of this data was unimaginable only a few years ago. We are proud to bring to our members an expanded service that will assist them in comparing their sustainability activities with those of their peers.”
The major findings from this year’s data are presented in a supporting publication released today, Sustainability Practices 2015: Key Findings.
Among these findings:
GRI reporting continues to rise among US companies, especially large multinational firms subject to international disclosure requirements
Out of the entire S&P 500 sample, the number of companies referencing GRI guidelines in their sustainability reports increased from 25 percent in 2013 to 31 percent in 2014. Among companies in the global sample, the increase was 1 percentage point, with 45 percent of S&P Global 1200 companies issuing reports that reference GRI guidelines. These results are indicative of the systematic efforts made by GRI to create awareness of its disclosure framework in the United States, especially since the establishment of their US Focal Point (now GRI North America) and the publication of the G4 version of the guidelines. Moreover, the findings reveal the evolving regulatory context faced by US companies conducting business abroad.
The sustainability disclosure rate grew faster among smaller companies, amid lower hurdles for first-time reporters and more awareness of data collection practices
While large businesses have traditionally been the main promoters of voluntary sustainability transparency, in the last year the greatest disclosure rate increase came from smaller companies. Companies in the lowest revenue group (less than US$1 billion in annual revenue) had an average disclosure rate of 25 percent across all the practices covered, up from the 15 percent recorded the previous year. Average disclosure rates remained mostly flat across the other three revenue groups included in the dashboard ($1B"$10B, $10B"$100B, and $100B+). The increase in disclosure among smaller companies was driven primarily by higher disclosure rates across the following practices: social supply chain management policies (+36 percent), human rights policies (+32 percent), women in the workforce (+31 percent), and waste reduction policies (+31 percent).
Report verification and assurance have increased slightly over last year
With the growth in nonfinancial disclosure also comes the need for report assurance. In the S&P Global 1200, 30 percent of companies are issuing sustainability reports that include third-party verification and assurance, compared to 25 percent in the previous year. Among S&P 500 companies, 12 percent included verification and assurance for their reports in 2014, compared to 8 percent in 2013.
Disclosure of the risks of climate change is becoming more prominent, especially among US companies
SEC guidance issued a few years ago may be starting to have some impact. This year’s data show 27 percent of S&P 500 companies included discussion of the risks associated with climate change in their annual SEC filings, compared to just 5 percent the previous year. The energy sector saw the greatest increase in this practice, with 43 percent of energy companies discussing climate change risks in their annual reports, compared to only 10 percent the previous year.
Sustainability continues to be absent from the executive compensation philosophy of most companies
Despite its prominence in today’s executive jargon, the rate of adoption of some form of pay-for-ESG performance link remains marginal in all geographic regions of the world. Only 3 percent of companies in the S&P Global 1200 are linking executive compensation to ESG performance. In Europe, 6 percent of companies implement this practice, compared to 3 percent in North America and 1 percent in Asia-Pacific.
Disclosure of anti-bribery ethics policies showed the greatest increase among all social and environmental practices
This increased disclosure could be a response to the more aggressive prosecution of corruption cases displayed by several countries. Among the entire S&P Global 1200 sample, this year’s data reflects an increase by 21 percentage points in the number of companies reporting an anti-bribery ethics policy. The finding is even more pronounced among large US companies; 59 percent of those in the S&P 500 report having an anti-bribery policy compared to 23 percent in the previous year. Disclosure of anti-bribery ethics policies rose significantly across most sectors, with the greatest increases found in the telecommunication services and information technology sectors (+34 and +32 percentage points respectively).
Despite the intense public policy debate on the diversity of business leadership, women continue to account for only 22 percent of management positions in the world’s largest companies
European legislation on gender equality in the boardroom has stirred a worldwide debate on the appropriate public policy to foster diversity in business. However, while more companies in the S&P Global 1200 are reporting this data (32 percent in 2014 versus 28 percent in 2013), the median percentage of women in management positions remains unchanged from 2013. Companies in Asia-Pacific and Latin America are showing marked improvement in the number of women in management positions. For instance, women accounted for 18 percent of management positions among companies in Asia-Pacific in 2014, up from only 12 percent in 2013. Among companies in Latin America, the share of women in management stands at 19 percent, up from 15 percent in 2013.
To view the full key findings report and access the dashboard, visit:
www.conferenceboard.org/sustainabilitypractices.
About the Conference Board
The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world’s leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501(c)(3) tax-exempt status in the United States.
www.conference-board.org
About Bloomberg
Bloomberg, the global business and financial information and news leader, gives influential decision makers a critical edge by connecting them to a dynamic network of information, people and ideas. The company’s strength " delivering data, news and analytics through innovative technology, quickly and accurately " is at the core of the Bloomberg Professional service, which provides real time financial information to more than 320,000 subscribers globally. For more information, visit:
www.bloomberg.com.
About GRI
GRI is a non-profit organization working in the public interest towards a vision of a sustainable global economy where organizations manage their economic, environmental, social and governance performance and impacts responsibly. To date, more than 5,000 organizations have used the GRI Guidelines for their sustainability reporting across more than 90 countries. More than 22,000 reports have been registered in GRI’s Sustainability Disclosure Database and 23 countries reference the Guidelines in policies. GRI’s activities are two-fold: firstly the provision of sustainability reporting guidelines and secondly, the development of engagement activities, products and partnerships to enhance the value of sustainability reporting for organizations.
