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The Future Of Sustainability Disclosures

Date: 14 September 2015

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28 pages

Executive Summary

The publication of an annual corporate sustainability report has emerged as common practice and is produced by many firms globally. With numerous businesses conducting the same resource-intensive processes year after year, many are questioning where to go next. Multiple paths have opened up with executives integrating methodological innovations, product-level disclosures, social media campaigns, as well as responding to multiple surveys and direct data requests from customers. To help executives involved in the sustainability ecosystem better understand current practices and trends, Verdantix conducted an independent analysis of the likely future evolution of sustainability disclosures.

TABLE OF CONTENTS

The State Of Sustainability Disclosures

Sustainability Disclosure Has Boomed Over The Last 20 Years
Numerous Types Of Disclosure Content And Approaches Have Appeared
Most Sustainability Disclosures Remain Stuck In The Communications ‘Green Ghetto’

Mobilizing The Heavyweights: When Will Asset Managers Care?

Early Signs Of Interest Have Raised Hopes Investors Will Take Sustainability On Board
Confusion And Low Financial Materiality Stymies Active Engagement By Investors
Understanding What Investors Consider Material Is The First Step To Closing The Gap
Firms Need To Get The Language Right To Hit Investor Buttons

Efforts To Fully Standardize Sustainability Disclosures Will Fail

Standard Setters, Framework Providers And Rating Agencies Are All Pursuing Different Strategies
Regulations Will Require More Than A Decade To Accelerate Adoption Growth And Drive Rationalization

Disclosure Practices Will Become Tailored By Type Of Audience

Firms Will Need To Refine What Their Reporting Objectives And Strategy Are
Today’s Understanding Of Materiality Will Become Much More Nuanced By Considering Audiences
The Content Of Sustainability Disclosures Is Unlikely To Expand Much Further
Firms Will Need To Mix-And-Match Multiple Methodologies To Create Relevant Disclosures For Their Stakeholders
Firms Will Be Able To Progressively Shift Beyond The Traditional Sustainability Report

Patterns Of Disclosure Will Remain Geographically Diverse

TABLE OF FIGURES

Figure 1. Timeline Evolution Of Corporate Non-Financial Reporting And Transparency
Figure 2. Voluntary Adoption Of GRI Reporting Framework From 1999 To 2014
Figure 3. Verdantix Sustainability Survey Results: Governance, Activities And Non-Profit Brand Awareness
Figure 4. Sample Of Diverse Non-Financial Initiatives, Frameworks, Standards, Ratings And Rankings
Figure 5. Growth Of Investor Interest In Sustainability Data Based On UNPRI Uptake 2006 To 2014
Figure 6. Mapping Common Terminology Used By Corporates And Investors
Figure 7. Comparison Of Common Reporting And Rating Schemes
Figure 8. Strategic Considerations When Refining Sustainability Disclosure Communications
Figure 9. Key Characteristics Of Current Versus Future Sustainability Disclosures
Figure 10. Understanding ESG Issues, Metrics, Risks And Opportunities
Figure 11. Four Types Of Sustainability Disclosures Practices

ORGANISATIONS MENTIONED

3E Company, 3M, AccountAbility, Advertising Age, AECOM, Aegon, American Electric Power, ArcelorMittal, Australian Securities Exchange (ASX), B Lab, Bankmecu, BASF, Ben & Jerry’s, BlackRock, Bloomberg, Bloomberg Philanthropies, BM&F BOVESPA, BOMcheck, BP, Breckenridge Capital, BrownFlynn, BSI Group, Calvert Investments, Carbon Pricing Leadership Coalition, Carbon Tracker Initiative, CDP, CERES, CFA Institute, CH2M, Chevron, Chipotle, Cisco, Cleantech Group, Climate Disclosure Standards Board (CDSB), CMO COMPLIANCE, Coca-Cola, Corporate Knights, CR Magazine, cr360, CRD Analytics, CSRHub, Deloitte, Deutsche Bank, Disney, Disney Cruise Line, DNV GL, DuPont, Ecodesk, EcoVadis, EDF, EIRIS, Electronic Industry Citizenship Coalition (EICC), Enablon, Enviance, Environmental Resources Management (ERM), Ernst & Ernst, Ethisphere Institute, European Commission, European Union (EU), Exxaro, Exxon, EY, Facebook, Fidelity Investments, Financial Accounting Standards Board (FASB), Forbes, Fortune, Franklin Resources, FTSE Group, General Electric Company, Gensuite, German Association for Financial Analysis and Asset Management (DVFA), Global Footprint Network (GFN), Global Impact Investing Network (GIIN), Global Initiative for Sustainability Ratings (GISR), Global Real Estate Sustainability Benchmark (GRESB), Global Reporting Initiative (GRI), Global Sustainability Standards Board (GSSB), GMI Ratings, Gold Fields, Goldman Sachs, Google, Green Building Certification Institute (GBCI), Greenhouse Gas Protocol, Greenpeace, Hang Seng Indexes, Hawaiian Holdings, Holcim, Impact Reporting and Investment Standards (IRIS), Ingersoll Rand, Instagram, Institutional Shareholder Services, Intel, Intelex, International Financial Reporting Standards (IFRS), International Integrated Reporting Council (IIRC), International Organization for Standardization (ISO), International WELL Building Institute, IW Financial, JetBlue, Johannesburg Stock Exchange Limited (JSE), Kering, KPMG, Leadership in Energy and Environmental Design (LEED), Legrand, Lehman Brothers, Liberty Holdings, LinkedIn, LPL Financial, McKinsey, Measurabl, Microsoft, MSCI, NASDAQ OMX Group, Natural Capital Coalition, Nestle, Newsweek, North Carolina Retirement Systems, Novozymes, NSF International, Ocean Tomo, Oekom Research, PG&E, Patagonia, Philips, Pinterest, PUMA, RepRisk, Rhein Asset Management, Rio Tinto, Rivo, RobecoSAM, S&P Dow Jones Indices, Sasol, Schneider Electric, Securities and Exchange Board of India (SEBI), Securities and Exchange Commission (SEC), Sedex, Seventh Generation, Shared Value Initiative, Shell, Shenzhen Stock Exchange (SZSE), S-Network Global Indexes, Social Accountability International (SAI), Sonen Capital, SROI Network, Standard Bank, Standard Chartered Hong Kong, Statoil, STOXX, Strate, Sustainability Accounting Standards Board (SASB), Sustainable Apparel Coalition, Sustainable Sites Initiative (SITES), Sustainable Stock Exchanges (SSE), Sustainalytics, Tellus Institute, The California Public Employees’ Retirement System (CalPERS), The Corporate Reporting Dialogue, DJSI, The European Federation Of Financial Analysis Societies (EFFAS), The Forum for Sustainable and Responsible Investment (US SIF), The Generation Foundation, The Organisation for Economic Co-operation and Development (OECD), The Prince’s Accounting for Sustainability (A4S), The Rockefeller Foundation, The Roundtable on Sustainable Palm Oil (RSPO), The Singapore Exchange (SGX), The Sustainability Consortium, The Times, The World Resources Institute (WRI), thinkstep, Thomson Reuters, Trillium Asset Management, Truworths, Twitter, UBS, UN Principles for Responsible Investment (UNPRI), Unilever, United Nations Conference on Trade and Development (UNCTAD), United Nations Environment Programme (UNEP), United Nations Global Compact, UPS, US Congress, US Environmental Protection Agency (EPA), US Supreme Court, Vestas, Vigeo, Walden Asset Management, Walmart, Workiva, World Business Council for Sustainable Development (WBCSD), World Federation of Exchanges (WFE), XBRL International, Xcel Energy, Xylem, YouTube, Zevin Asset Management