« View All Blog Posts

2009 a Boon for Sustainability Reporting
By Sara Laks

S&P 100 companies producing sustainability reports have increased by more than one third in the past year, according to a report from the Sustainable Investment Research Analyst Network (SIRAN), a working group of the Social Investment Forum (SIF).  The report, titled S&P 100 Sustainability Reporting Comparison found that now 93 of the S&P 100 provide sustainability information on their website.  The working group, commissions KLD, a leading provider of risk management and corporate governance data for the financial community, to track metrics such as CSR reporting, references to the Global Reporting Initiative (GRI), GRI content index, goals and benchmarks reporting, and GRI “In Accordance” or “A”, the most comprehensive level of ESG reporting.

Another momentous step for ESG disclosure in 2009 came from the regulatory level.  This November, the proxy season kicked off with an SEC policy change that revises a 2005 policy that allowed companies to omit resolutions involving, “an internal assessment of the risks or liabilities that the company faces as a result of its operations that may adversely affect the environment or the public’s health” by categorizing them as business-as-usual matters that were not suitable for shareholder consideration.  The new policy recognizes the value in risk management of many social policy issues for companies and shareholders, now evaluating a “no-action” request based on whether policy in question is large enough to be considered rather than whether it involves an evaluation of internal risk.  This policy change opens the door for shareholder resolutions that address the inherent risk in issues such as climate change.

Investors and CSR advocates also showed strength in 2009 in support of comprehensive ESG reporting.  In example, this year more than 50 major investment firms and professionals, including First Affirmative and the Social Investment Forum, submitted a proposal to the SEC to require an annual report covering a uniform and comprehensive set of sustainability indicators as defined by the most comprehensive level of the current Global Reporting Initiative (GRI) guidelines.

These inroads on corporate, governmental and advocacy fronts are together enhancing the ability of investors and consumers to make informed decisions about which corporations to support and incentivizing the corporate world to improve their ESG performance.  The improving and expanding amount of information available is finding its way into a growing number of ESG databases available to investment managers such as KLD, IWG and new players like Bloomberg.   And this increased accessibility should lead to increased awareness, interest and credibility for the SRI industry.

The end of this decade has certainly set the stage for the next decade to continue to improve sustainability reporting.   By providing public accountability and transparency, standardized, comprehensive ESG disclosure is a necessary foundation for a true “greening of our economy” and a sustainable future.

Sara Laks
Assistant to the President
saralaks@firstaffirmative.com

Posted: January 20, 2010