Sustainability Practices 2015

Matteo Tonello is Managing Director at The Conference Board, Inc. This post relates to Sustainability Practices 2015, an annual benchmarking report authored by Mr. Tonello and Thomas Singer. The complete publication, including footnotes, graphics, and appendices, is available here.

More US companies are aligning sustainability disclosure with global standards through the Global Reporting Initiative (GRI) framework. Even though the overall environmental and social disclosure rate among global companies has remained essentially unchanged over the last year, reporting using the GRI framework continued its rise in the United States, and one out of three large U.S. companies now adopt those guidelines. Exceptional progress has also been made in the transparency of individual practices, such as anti-bribery and climate change.

These are some of the findings from The Conference Board Sustainability Practices Dashboard 2015, a comprehensive database and online benchmarking tool that serves as the foundation for this report. The dashboard captures the most recent disclosure of environmental and social practices by large public companies around the world and segments them by market index, geography, sector, and revenue group. Other key findings from this year’s data include the following:

Reporting Practices

  • GRI reporting continues to rise among US companies, especially large multinational firms subject to international disclosure requirements.
  • The overall sustainability disclosure rate (an average across all practices analyzed) grew faster among smaller companies in all regions.
  • Report verification and assurance have increased slightly over last year.

Environmental Practices

  • The risk climate change poses to a business is being disclosed with more prominence, especially among US companies.
  • Greenhouse gas (GHG) emissions disclosure has reached unprecedented levels among smaller companies.
  • Water consumption disclosure remains low, despite growing recognition of a global water crisis.

Social Practices

  • Disclosure of anti-bribery policies showed the greatest increase among the practices analyzed in response to more aggressive prosecution of corruption cases by several countries.
  • Pressure from stakeholders drove significant uptake in human rights policy disclosure.
  • Employee turnover increased across all sectors, especially in the United States. The increase is most likely a reflection of modest improvement in labor markets.
  • Corporate charitable and community spend in the S&P Global 1200 increased 13 percent over last year. North American companies continue to replenish their giving programs after the hiatus of the economic recession.
  • Sustainability continues to be absent from the executive compensation philosophy of most companies regardless of geographic location.

Year-Over-Year Trends

Disclosure is Increasing

This year’s edition of Sustainability Practices revealed that for eight out of the ten sectors included, overall disclosure increased with the telecommunication services sector showing the greatest increase over last year (+6 percentage points). Health care and utilities were the only sectors to register decreases (-1 percent each). Disclosure rates by revenue group remained mostly flat, with the exception of companies in the lowest revenue group (less than US$1 billion in annual revenue), which registered an increase in disclosure of 10 percentage points. Trends by region show that companies in both North America and Europe registered slight increases in disclosure, while disclosure rates fell in Latin America and remained unchanged in Asia-Pacific.

Data for Two New Social Practices

This year’s edition features data on two new practices: disclosure of child labor policies and adoption of executive compensation policies that include long-term incentives for environmental, social, and governance (ESG) performance. The results show that a mere 3 percent of the largest companies in the world included in the S&P Global 1200 index currently link executive compensation to ESG performance, and 38 percent disclose having a child labor policy.

The complete publication, including footnotes, graphics, and appendices, is available here.

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