Environmental Governance - the growing demand for quantified sustainability data
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Shareholder Interests The past several years have seen the creation, rapid expansion and strategic alignment of hundreds of influential shareholders who are connecting sustainability performance to corporate governance. These groups are actively comparing and contrasting the environmental performance of thousands of companies as they make their investment decisions. They are also actively pursuing strategies that call for greater transparency of corporate sustainability performance. These shareholders range from public pension plans, to corporate pensions, to traditional Wall Street institutions, and represent trillions of dollars of investment capital. They are coordinating their efforts through a number of unique coalitions and initiatives. Numbers are current as of January 2008.
Thousands of companies are responding to the increasing demand for environmental transparency by publishing corporate social responsibility (CSR) reports, sustainability reports, environmental reports, enhancing their websites and/or through their annual financial reports. This disclosure includes regulated information, as well as non-regulated information such as energy usage, recycling programs and carbon emissions. The result is an ever increasing amount of environmental performance data that is available in the public domain. The availability and use of this type of performance data requires companies to insure that consistent information is being reported through all external communication channels. It also requires an understanding of the research and decision making process of the investment community, as well as the research resources being used by the investment community. Public Company Implications A company's inability to voluntarily report sustainability information sends a message to the market. Companies that do not respond to the markets growing demand for sustainability information are developing their own reputation in this growing global market. Investors are increasingly demanding sustainability disclosure through the use of shareholder resolutions, proxy voting initiatives and coordinated shareholder actions. The absence of sustainability data not only slows the flow of investment capital seeking sustainable investment opportunities, it can create significant financial and reputational implications. Private Company Implications As public companies measure, manage and report on their own sustainability performance they begin to understand the impacts caused by their choice in suppliers. Numerous multinational corporations are actively assessing the sustainability performance of their supply chains and reporting on these activities. Similar to the way ISO 9000 & 14000 rippled through supply chains, sustainability reporting is becoming an increasing component of supply chain management. As such, private companies need to understand the sustainability challenges faced by their clients and should be prepared to report sustainability in a manner that supports their clients needs and interests. |
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