A new report by The Conference Board reveals the latest trends in sustainability reporting. The analysis examined how nearly 6,000 companies in 26 countries are reporting on more than 90 environmental and social practices, ranging from greenhouse gas (GHG) emissions to boardroom diversity to water consumption.
As companies prepare for the sustainability reporting season, here are four takeaways.
1. Sustainability reporting continues to increase
Across the global sample, nearly one-quarter (23 percent) of companies report their GHG emissions. That’s up from 21 percent last year. And in the U.S. sample (made up of the 250 largest companies by revenue), 56 percent of companies report GHG emissions. Last year, 49 percent of U.S. companies in the sample reported this data.
Climate risk disclosure is also on the upswing: Across the global sample, 9 percent of companies report climate-related risks, up from 6 percent last year. Almost half of U.S. companies examined (47 percent) disclose climate risk, a significant increase from 36 percent last year.
The analysis also found increases in disclosure of water consumption: One in five companies in the global sample report how much water they consume, up from 18 percent last year. Such disclosure is also up in the United States, as more than one-third (34 percent) of companies in the sample report this data, compared to 29 percent last year. What’s fueling the disclosure momentum?
In part, it’s the prominence of climate issues in the voting policies of several large institutional investors, including BlackRock and State Street. In some cases, investors themselves are required to disclose their exposure to climate-related risks.
In the U.S., for example, the two largest public pension funds — the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) — are required by California law to report the climate-related financial risks of their portfolios as of the beginning of this year.
There is also the fact that sustainability disclosure requirements in Europe are influencing the reporting practices of companies in other jurisdictions, including U.S. companies. The recent implementation of the European Union’s nonfinancial reporting directive, for example, is resulting in increased disclosure by both European and foreign companies operating in Europe, as the latter are also subject to the requirements.