Sustainability
G&A Institute Newsletter / March 2018

Research Results: 85 Percent of the S&P 500® Index Companies Published Sustainability / Responsibility / Citizenship Reports in 2017

Burgess COMMENTARY

Peter Burgess

Research Results: 85 Percent of the S&P 500® Index Companies Published Sustainability / Responsibility / Citizenship Reports in 2017

One of the world’s most important benchmarks for equity investors is the S&P 500 Index®, a proprietary market-value weighted “basket” of the top stocks that represent about 80% of the U.S. equity markets according to the owner, S&P Dow Jones Indices/McGraw Hill Financial.

There is about US$8 trillion in Assets Under Management benchmarked to the index – companies included have a market-cap of $6 billion or more (ticker:SPX).

More than six years ago the G&A Institute team decided to focus on the companies in the index to determine their level of (or lack of) ESG / Sustainability / CR / Citizenship disclosure and reporting. Our first look-see was for year 2011 reporting and after scouring the known sources (corporate websites, printed reports, search engines results, connecting with companies and more) we found just about 20% or about 100 of the large-cap 500 companies were doing “something” along the lines of what we can describe today as structured reporting.

A good number of the reporting companies were following the Global Reporting Initiative (GRI) framework (that was for G3.1 at the time), and some perhaps had some other form of reporting (such as publishing key ESG performance indicators on their web site or in print format for stakeholders). This was a good bit of work for our analyst team because many of the companies simply did not announce or publicize the availability of their sustainability et al report.

The response to the first survey (we announced results in spring 2012) was very encouraging and other organizations began to refer to and to help publicize the results. Looking back, the research results were reflecting what was going on in the corporate and investment communities, as more asset owners and managers were adopting ESG / sustainability approaches, policies, practices -- and urging public company managements to get going on expanded disclosure beyond the usual financials. We were at an important tipping point in corporate disclosure.

There was peer pressure as well within industries and sectors, as the big bold names in Corporate America looked left and right and saw other firms moving ahead with their enhanced disclosure practices. And there was pressure from the purchasing side – customers were asking their corporate supply chain partners for information about their ESG policies and practices, and for reports on same. There was an exponential effect; companies within the 500 were, in fact, asking each other for such reports!

We created a number of unique tools to help guide the annual research effort. Seeing the characteristics of reporting by America’s largest and for the most part best-known companies we expanded our “Sustainability Big Data” resources and decided to closely track S&P 500 companies’ public reporting and feed the rich data in our databases.

The following year (2013) we tracked the 500’s year 2012 reporting activities – and found a very encouraging trend that rang a bell with our sustainable investing colleagues: a bit more than half of the 500 were now publishing sustainability et al reports. Then in 2013, the numbers increased again to 72%...then 75%...then 81%...and now for 2017, 85%. The dramatic rise is clearly evident in this chart:



As Louis Coppola, EVP of G&A Institute who designs and manages the analysis notes: “Entering 2018, just 15% of the S&P 500 declined to publish sustainability reports. The practice of sustainability reporting by the super-majority of the 500 companies is holding steady with minor increases year after year. One of the most powerful driving forces behind the rise in reporting is an increasing demand from all categories of investors for material, relevant, comparable, accurate and actionable ESG disclosure from companies they invest in. Mainstream investors constantly searching for larger returns have come to the conclusion that a company that considers their material Environmental, Social, and Governance opportunities and risks in their long-term strategies will outperform and outcompete those firms that do not. It's just a matter now of following the money.”

Does embracing corporate sustainability in any way impact negatively on the market performance of these large companies? Well, we should point out that the annual return for the SPX was 22% through 12-13-18. You can read more in our 2018 Flash Report here.

Kudos to our G&A Research Team for their significant contributions to this year’s report: Team Leader Elizabeth Peterson; analyst-interns Amanda Hoster, Matthew Novak, Yangshengling “UB” Qui, Sara Rossner, Shraddha Sawant, Alan Stautz, Laura Malo Yague and Qier “Cher” Zue.

The reports from prior years are posted on the G&A Institute website here. Click here to view our Honor Roll there for the roster of the talented analysts who have worked on each year’s report on the S&P 500 reporting activities.

Sustainability: Forward Momentum! For Your Attention: The Editors' Scans

Five key sustainability trends for 2018 (Wednesday - March 14, 2018) Source: Ethical Corp - With consumer and corporate demand for responsible sourcing taking centre stage, Britta Wyss Bisang of Rainforest Alliance predicts the biggest sustainability trends for 2018 and beyond.

Sustainability isn’t expensive; it’s profitable (Tuesday - March 13, 2018) Source: The Cable - Imagine a bank with 600 branches and N1m monthly spend on diesel per branch. In a month, it spends N600m on diesel only. This year alone, it is likely to spend up to N7.2b on diesel. All things being equal, and if this trend is...

Convenience at the cost of sustainability? Not necessarily (Tuesday - March 13, 2018) Source: GreenBiz - The holidays have come and gone, but e-commerce continues to thrive long after the gift-giving season. With speedy delivery times and easy checkout, shoppers have grown accustom to ordering everything they need for their...

Greening India for a sustainable tomorrow (Tuesday - March 13, 2018) Source: PV Magazine - Actions taken today in the pursuit of environmentally sustainable and socially inclusive growth path in India stand to benefit more than 17 percent of the world’s population. A sustainable future for India carries an impact for...

Shrimp farming sustainability initiative launched (Tuesday - March 13, 2018) Source: The Fisn Site - Called the Sustainable Shrimp Partnership (SSP), members are committed to achieving and promoting the highest quality products, produced to the highest social and environmental standards, through greater collaboration...

The Seligmann family links the head and the heart of sustainability (Tuesday - March 13, 2018) Source: GreenBiz - Conservation International co-founder Peter Seligmann took the stage at the GreenBiz 17 conference in Phoenix, Arizona, together with his daughter Leah Seligmann, who leads the B Team's climate change efforts as director of the...

McKinsey’s Head on Why Corporate Sustainability Efforts Are Falling Short (Wednesday - March 14, 2018) Source: Harvard Business Review - Dominic Barton, the global managing partner of McKinsey&Company, discusses the firm’s sustainability efforts. He talks about the wake-up call he got about sustainability and how he tries to convince CEOs hesitant to make it part...

Paris Fashion Week concludes with sustainability round table (Wednesday - March 14, 2018) Source: Ecotextile - PARIS – To mark the conclusion of Paris Fashion Week, the Ambassador of Great Britain hosted a fashion sustainability round table discussion at the British Embassy in the French capital.

Sustainability sows a healthy business climate (Wednesday - March 14, 2018) Source: Cornell.edu - The color of money may be the best tint for keeping the world from warming its climate. That was a key message as corporate professionals gathered with students at the Cornell Business Impact Symposium, “Unleashing the Hidden...

How to make sustainability every employee's responsibility (Thursday - March 15, 2018) Source: New Times - Do you believe that sustainability is important for your company, but that it’s “someone else’s problem”? You aren’t alone: While most organisations talk the talk of sustainability — doing things such as integrating environmental...

How far has your industry group traveled along the sustainability journey? (Friday - March 16, 2018) Source: GreenBiz - Where is your industry association on the sustainability continuum? Do you know what it's doing to help your sector anticipate, influence and steer during these disruptive, turbulent times?

Our Focus This Week on A Range of ESG Topics & Issues – More Things to Think About…

Global Warming and Climate Instability: One Last Chance to Save Ourselves (Tuesday - March 13, 2018) Source: Global Reserch - The year 2017 was a record-breaking year for extreme weather and environmental catastrophes since records started to be kept in the 19th century. The Arctic experienced temperatures up to 70 degree F above normal.

Senate passes rollback of post-financial crisis banking rules (Thursday - March 15, 2018) Source: Washington Post - The Senate on Wednesday passed the most significant loosening of financial regulations since the economic crisis a decade ago, delivering wide bipartisan support for weakening banking rules despite bitter divisions among...

What does investing ethically mean? (Thursday - March 15, 2018) Source: City AM - Ethical or socially responsible investing encourages corporate behaviour that promotes environmental stewardship, consumer protection and human rights. In addition, it usually means actively avoiding businesses involved in such...

Watch Out For These 4 Emerging Environmental, Social, and Governance Risks (Friday - March 16, 2018) Associated Profiles : Sustainable Apparel Coalition Source: Morningstar - The firm is engaged with the Sustainable Apparel Coalition to develop standards for assessing supply-chain sustainability issues, and in Ethiopia it is engaging with government on wages, while paying workers well above minimum...

United States: What Directors Need To Know In 2018 About Board Diversity (Friday - March 16, 2018) Source: Mondaq - n 2017, investors challenged many public company boards1 to improve their gender, racial, and ethnic diversity. 2 Institutional investors, such as CalPERS3 and NYC Pension Funds, 4 as well as large mutual fund companies, such as...

News for You From the Corporate Sector -Both Positive & Negative - Headlines

Dick's Sporting Goods CEO expects to lose customers over gun stance (Wednesday - March 14, 2018) Source: CNBC

Theranos Founder Elizabeth Holmes Was Just Charged With 'Massive Fraud.' Here's What the SEC Says She Did (Thursday - March 15, 2018) Source: Time

IKEA, Marks & Spencer sign up to ambitious new sustainability goals (Thursday - March 15, 2018) Source: GreenBiz

Does your bottled water contain plastic? (Friday - March 16, 2018) Source: CBS News

News & Opinion: Asset Managers, Sovereign Wealth Funds, Pension Funds

‘Sovereign investment fund would protect against war' (Monday - March 12, 2018) Associated Profiles : New Zealand Superannuation Fund Source: The Jerusalem Post - It said Israel, which still has a $120b. budgetary pension obligation, should designate a fund based on the New Zealand Superannuation Fund and Norway’s Government Pension Fund-Global. Like the earthquake fund, the New..

Goldman Names David Solomon as Next in Line to Replace CEO Blankfein (Monday - March 12, 2018) Source: Bloomberg - Goldman Sachs Group Inc. said David Solomon will become sole president of the company, elevating him over Harvey Schwartz as the successor to Chief Executive Officer Lloyd Blankfein.

Pension fund would divest from gun companies under new bill (Friday - March 16, 2018) Associated Profiles : Pension Reserves Investment Management Board (Massachusetts), Massachusetts Pension Reserves Investment Management Board Profile Source: The Lowell Sun - The bill would require the Pension Reserves Investment Management Board to withdraw any holdings in companies that derive 15 percent or more of their revenues from the sale or manufacture, of ammunition, firearms or firearms...

Wells Fargo pushed by nuns to address the bank's ethical lapses (Thursday - March 15, 2018) Associated Profiles : New York State Common Retirement Fund Source: Bloomberg.com - Separately, Wells Fargo agreed this week to put a shareholder proposal on its proxy ballot from the New York State Common Retirement Fund that seeks more information about employee incentives beyond its executive officers,..

Trump Administration Impact on Sustainability / Corporate and Investor Affairs

Weathering Trump's skepticism, U.S. officials still fighting global warming (Friday - March 16, 2018) Source: Reuters - U.S. President Donald Trump has bashed international efforts to combat climate change and questioned the scientific consensus that global warming is dangerous and driven by human consumption of fossil fuels.