Corporate ESG / Sustainability Reporting
Does It Matter? Who Cares?Presented by
Louis D Coppola, M.B.A, Senior Vice PresidentGovernance & Accountability Institute, Inc. Tel 646.430.8230 x14 Email [email protected] Web www.ga-
institute.com
NIRI NYBaruch College, New York, New York – March 27, 2012
Questions Posted in Research Effort
Does corporate sustainability and responsibility reporting according to GRI Framework matter to capital market players?
Do capital market players assign a premium to corporate issuers that measure, manage and publicly report on ESG performance?
Does GRI reporting influence credible third parties ranking and/or rating corporate performance in leading compilations?
Short Answers… Yes, Yes & Yes
US Companies Looked At
Fortune 500® Companies Largest in Revenues in USA Stock Performance Selection by Third Parties for Rankings & Ratings
S&P500® Index Companies Stock Performance Only
To Determine: Was there measurable outperformance if large-cap
companies reported on their ESG KPIs according to the GRI Framework
Fortune 500 Companies examined S&P 500 Companies Examined Measured against Equal Weighted Index of
S&P 500 Index for Years 2006-2010
Four Year Performance of S&P 500 GRI Reporters & Fortune 500
GRI ReportersVS S&P 500 Equal Weighted Index (S&P
500 EWI)
Indexes1 Year Return
2 Year Return
3 Year Return
4 Year Return
TOTALReturn
YTDReturn
S&P 500 GRI Reporters 18.46% 71.29% 4.19% 14.66% 19.85% 4.52%Fortune 500 GRI Reporters 17.60% 82.11% 7.13% 15.54% 20.72% 3.42%S&P 500 EWI Reporters 19.81% 71.64% 1.28% 1.34% 6.66% 4.06%
Given Indicated Outperformance, Are Fortune 500 Companies
That Are GRI Corporate Reporters MoreLikely to be Included in Leading
Indexes?
NASDAQ OMX CRD Global Sustainability Index ® (QCRD) Yes
Dow Jones Sustainability Index World® Yes
Dow Jones Sustainability Index North America® No
NASDAQ OMX CRD Global Sustainability Index ® (QCRD)
Dow Jones Sustainability Index World®
Dow Jones Sustainability Index North America®
Question: What Impact Does Sustainability & CR Reporting have on Selection for Third Party Reputational
Lists? Question:
Is there a correlation for corporate GRI reporters and selection for popular and credible reputational lists and rankings? We looked at two leading lists with companies ranked.
Answers: Yes for Newsweek Greenest Companies in America®
Ranking Top 100 and 500 Yes for CRO 100 Best Corporate Citizens®
Newsweek Greenest Companies in America® Ranking Top 100 and 500
CRO 100 Best Corporate Citizens vs. GRI
Question: DoesSustainability & CR Reporting
have an impact on Sustainability Ratings?
Yes for CRD’s Sustainable Performance Value® (SPV) – Smart View 360® Platform
Yes for Carbon Disclosure Project Score (CDP)
CRD’s Sustainable Performance Value® (SPV) – Smart View 360®
Platform
82% of Non Reporting CompaniesScored Below 50
64% of Reporting CompaniesScored Above 50
Carbon Disclosure Project Score (CDP)
Sector Differences to Consider
Conclusions Corporate Sustainability and Responsibility reporting according to
the GRI Principles seems to make a difference to investors – reporting companies are outperforming S&P Index peers in share price performance.
Reporting matters to compilers of leading reporting list and reputational rankings, and for corporate ratings on ESG performance.
GRI is the standard for ESG/Sustainability reporting – Investors Want Consistency and Comparability.
GRI has become a global standard for Corporate Responsibility and Sustainability Reporting – becoming a widely-accepted mechanism to providing Consistency over the past four years.
US Companies are measuring and managing ESG performance and reporting to GRI Principles in increasing numbers – but the percentages by sectors is still low compared to other countries and regions.
Updated Report Coming This Year
Analyzing the S&P 500® Companies in the same way using 2011 reporting data.
Adding additional corporate rankings and ratings by third parties. Updated Report will be available July 1st.
News: G&A Institute is now the USA, UK, and Ireland Data Partner for GRI
– gathering and analyzing corporate reporting results to GRI for dissemination worldwide.
Providing much more quantitative and qualitative information for the corporate comparisons going forward.
Coming Soon: US Focal Point / Big 4 / G&A
Trends in External Assurance External Assurance improves the quality of
reporting and the trust shareholders/stakeholders can place in the data
Roughly 15% of US GRI Reporters have their reports externally assured
Worldwide around 50% are assured
Pressing Issues for External Assurance
Confusion in terminology
Who is most qualified to do such reviews?
What are the differences in the levels and scope of reviews?
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