The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Thu, 23 Apr 2026 11:32:47 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Sustainability Reporting: A Gap Between Words and Action – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Sustainability Reporting: A Gap Between Words and Action https://corpgov.law.harvard.edu/2021/10/20/sustainability-reporting-a-gap-between-words-and-action/?utm_source=rss&utm_medium=rss&utm_campaign=sustainability-reporting-a-gap-between-words-and-action https://corpgov.law.harvard.edu/2021/10/20/sustainability-reporting-a-gap-between-words-and-action/#comments Wed, 20 Oct 2021 13:13:32 +0000 https://corpgov.law.harvard.edu/?p=141029?d=20211020105237EDT Posted by Subodh Mishra, Institutional Shareholder Services, Inc., on Wednesday, October 20, 2021
Editor's Note:

Maureen McCarthy is an ESG Analyst at ISS ESG, Institutional Shareholder Services, Inc. This post is based on her ISS memorandum. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance (discussed on the Forum here) and Will Corporations Deliver Value to All Stakeholders?, both by Lucian A. Bebchuk and Roberto Tallarita; For Whom Corporate Leaders Bargain by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita (discussed on the Forum here); and Restoration: The Role Stakeholder Governance Must Play in Recreating a Fair and Sustainable American Economy—A Reply to Professor Rock by Leo E. Strine, Jr. (discussed on the Forum here).

Key Takeaways

  • Investor attention on sustainability issues has increased in recent years and shows no sign of abating.
  • While the demand for ESG information is increasing, variation in the quality of data is a major headwind.
  • Of over 7,000 ISS ESG-rated corporate entities, data indicates that the quality of most Sustainability Reporting is suboptimal, leaving stakeholders with opaque views of company performance.
  • Sustainability Reporting will continue to improve, and should evolve to be standard business practice.

ESG and the New Normal

A common misconception about Environmental, Social and Governance (ESG) investment practice is that, along with the many other sustainability acronyms, it is a hot topic driven by the media. The terminology might be trending and evolving, but the fundamental convictions behind sustainable value, transparency, and accountability to stakeholders are the new business as usual.

Demand for ESG Disclosure and the related ecosystem has grown exponentially in recent years. The COVID-19 pandemic exacerbated social issues such as occupational health and safety and supply chain labor, and now urgent global disruptions are giving way to investors finding solutions to understand and catalyze corporate responsibility. Extra-financial measures are increasingly integrated into investor decision making; the number of investor PRI signatories has increased by 29% in the last year alone.

Since 2006, ISS ESG has seen an increase in shareholder proposals requesting that companies report their climate change performance. Institutional investors are seeing the connection between long- term business health and systematic management of ESG issues such as climate.

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