The number of S&P 500 and Fortune 500 companies managing and reporting performance on environmental, social and governance (ESG) issues more than doubled from 2010 to 2011, according to an analysis by Governance & Accountability Institute.
G&A Institute, the data partner for the Global Reporting Initiative (GRI) in the US, UK and Ireland, says in last year’s report, 19 percent of the S&P 500 reported. In the 2012 report, the number jumped to 53 percent.
Similarly, in 2011’s report researchers found 20 percent of the Fortune 500 reported; in this year’s analysis 57 percent reported.
This means — for the first time — non-reporters are in the minority.
The 2012 study marks G&A Institute researchers’ second year examining corporate sustainability and responsibility trends by large US companies. This year’s report, 2012 Corporate ESG/Sustainability/Responsibility Reporting: Does It Matter?, focused on S&P 500 companies while last year’s report centered on Fortune 500 companies.
G&A Institute first manually researched publicly available information on the reporting practices of all companies in the S&P 500. It then evaluated financial performance in the capital markets by comparing performance of S&P 500 companies that report against the S&P 500 equal weighted index.
The answer to the question — does such reporting matter? — is, according to G&A Institute, yes.
Companies that measure and manage their sustainability issues perform better over the long-term in the capital markets, the report concludes. It does, however, say that evaluating a larger group of companies over a longer period of time would be more definitive.
The report also found companies that report on their sustainability strategies, initiatives, programs and performance appear to be more likely to be selected for key sustainability-reputation lists, ranked higher by sustainability reputation raters and rankers, and selected for inclusion on leading sustainability investment indexes.
During 2012 many stock exchanges globally announced new rules for the disclosure of non-financial information on environmental and social issues, but weak enforcement mechanisms mean that most CFOs and investor relations directors will opt out of following ESG guidance, according to a report published this month by Verdantix.