In-Depth Report: Sustainability Reporting
Why are public companies facing shareholder proposals on their ESG and sustainability reporting?
Issues related to sustainability represent the next frontier in corporate reporting. In recent years, an increased focus on sustainability-related issues has caused even the most mainstream investors to question whether companies are effectively addressing the potential risks posed by their operational impact on the environment and society. According to a 2018 Ernst & Young survey, 97% of investors say they conduct either an informal or a structured methodical evaluation of a company’s nonfinancial disclosures.
By contrast, a 2017 MIT Sloan Management Review survey found that while 90% of executives see sustainability as important, only 60% of companies have a sustainability strategy; of these, only 25% had developed a clear business case for their sustainability efforts. It is, therefore, unsurprising that more investors have pressed companies to produce sustainability reports that accurately depict how they manage and address sustainability concerns. Given the growth in interest, it is increasingly important that companies not only consider sustainability issues but also communicate their sustainability strategies to investors, and sustainability reports are a key vehicle for communicating this information. However, as companies adapt to rising investor demands through ever more complex forms of sustainability reporting, confusion has increased over what to report and the best way to report it.
This proxy season, boards and management will once again be asked to improve and increase their reporting on ESG and sustainability issues. Investors will be asked to vote — and will need to understand the issues involved. Glass Lewis’ newly updated Sustainability Reporting report provides crucial context, from an overview of different reporting standards, background on regulation and market practice, and a discussion of associated benefits and obstacles. The report is part of Glass Lewis’ “In-Depth” series, a growing library of ESG-focused literature that illuminates the topics at the top of the agenda for investors and public companies.
In-Depth: Sustainability Reporting is available now. Glass Lewis customers can access the report on Viewpoint via the Help & Resources menu, or Governance Hub, or contact their Glass Lewis Representative for more information.
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