Only 3% of the world’s largest companies report on the first generation of sustainability indicators according to Corporate Knights report on Trends in Sustainability Disclosure. The seven indicators are: employee turnover, energy, greenhouse gases (GHGs), lost-time injury rate, payroll, waste and water. Sadly, but unsurprisingly, Corporate Knights recommends mandatory disclosure because voluntary disclosure is plainly not revealing the required data.
EIRIS coincidentally reported on research done with eleven stock exchanges which have expressed their desire to improve sustainability reporting. The reasons for supporting sustainability disclosure are all worthy, economically as well as morally:
- to improve the environmental, social and corporate governance (ESG) performance of companies listed on their exchanges
- to encourage and to help investors engage with companies on sustainability issues
- to identify themselves in the marketplace as committed to sustainability
- to draw on the latest research to support the link between long-term financial performance and ESG issues.
More regulation always brings imperfections but it becomes necessary when behaviour doesn’t adapt voluntarily. For that to happen, investors must demand disclosure from the companies they own. That means that asset managers and other fiduciaries must ask for ESG data.
It is long past time for big listed companies to own up about their behaviour, about the amount they pollute the planet and society. It will be revealing when they do, as this graphic from Bloomberg’s sustainability report indicates (eg 1.9 tonnes of travel emissions per employee!).
SocialFunds.com: Sustainable Stock Exchanges can Influence Corporate ESG Performance