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December 18, 2012
Corporate Laggards: Your Competitors are now Reporting
    by Robert Kropp

A report from the Governance & Accountability Institute finds that more than half of S&P 500 companies now produce sustainability reports, and most that do use the Global Reporting Initiative framework.

For years, sustainable investors have consistently emphasized to corporations the necessity of producing sustainability reports, and not only to account for environmental, social, and corporate governance (ESG) factors; increasingly, analyses are finding that corporate reporting on measures addressing sustainability helps yield long-term financial benefits as well.

According to a new report from the Governance & Accountability Institute, the financial benefits of sustainability reporting can include lower costs of capital and higher share prices, as increased transparency can make corporations more attractive to long-term, sustainable investors.

Historically, US-headquartered corporations have tended to lag behind their European counterparts in reporting on sustainability issues. But as G&A Institute discovered, the number of S&P 500 companies now producing such reports has increased dramatically in just the last year. "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."

Furthermore, "In 2011's analysis, 20% of the Fortune 500 reported, in this year's research effort it was determined that 57% companies reported."

"For the first time the non-reporters are in the minority," the report states.

As more corporations begin to report, the expectations of shareowners have grown. No longer is it enough merely to produce a sustainability report. In order to ensure that reporting is comparable with a corporation's industry peers, companies are expected to utilize a standardized format in which meaningful comparisons can be made. G&A Institute is the US-based data partner for the Global Reporting Initiative (GRI), whose G3 Framework is the most widely used in the world. An updated G4 Framework is scheduled for early 2013.

The majority of companies in the S&P 500 and the Fortune 500 that produce sustainability reports now use the GRI Framework, G&A Institute found.

Not surprisingly, companies that do issue sustainability reports are more likely to find themselves included on such high-profile lists as the Newsweek Green Rankings. Also, companies that report are more often included on sustainability investment stock indexes.

Noting that the most recent Trends report from US SIF: The Forum for Sustainable and Responsible Investment found sustainable investing to be outpacing the mainstream, G&A Institute concluded, "Investors are recognizing and supporting companies that are active and serious in this space and producing sustainability reports that reflect real progress in addressing ESG performance."

G&A Institute Chairman Hank Boerner stated, "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."


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