Become A Member Benefits and Ordering Competitive Advantage

By Sara Laks

Sustainability reports have increased by more than one third in the past year among the largest 100 companies in the U.S., 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 93 of the S&P 100 companies now provide sustainability information on their website. The working group commissioned 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), and goals and benchmarks reporting.

Another momentous step for ESG (environment, social, governance) disclosure in 2009 came from the regulatory level. In November 2009, the proxy season kicked off with an important SEC (Securities and Exchange Commission) policy change. The SEC has revised a 2005 policy that allowed companies to omit many shareholder resolutions seeking an assessment of risks or liabilities based on a company’s environmental impacts or affects on public health.

The new policy recognizes the value in managing risks around many social and environmental issues. The Commission will now consider shareholder proposals based on whether the question is focused on a material aspect of the business (large enough to be potentially effect shareholder value). This policy change opens the door for shareholder resolutions that address the inherent risk around issues such as climate change.

Investors and CSR (Corporate Social Responsibility) advocates also pushed for more comprehensive ESG reporting in 2009. For example, 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, government, and advocacy fronts are together enhancing the ability of investors and consumers to make informed decisions about which corporations to support and encouraging corporations to improve their ESG performance. The improving and expanding amount of information available is finding its way into a growing number of ESG databases through social research providers such as KLD, IW Financial, and now Bloomberg.

The stage is set for continued improvements in sustainability reporting in 2010 and beyond. The public accountability and transparency created by addressing ESG issues is a necessary foundation for truly greening our economy.