Do investors care about companies’ climate change disclosure?

Taken at face value, more evidence surfaced this month supporting a close relationship between company market performance and the disclosure of environmental, social and governance criteria.  Less clear is when more investors will reward ESG disclosure and inspire nondisclosing companies to get on board.  Integrating fundamental equity analysis with ESG criteria boosts the quality of investment decisions, according to the Principles for Responsible Investment.

A similar assessment by Deloitte outlines both the short- and long-term implications of ESG investment management. Further, the Carbon Disclosure Project now has 722 institutional investors representing $87 trillion in assets requesting companies to report their carbon emissions and climate change strategies. This same investor group is also asking companies to report on water and forest use, reflecting a heightened awareness of natural capital and environmental costs.

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CBRE, City of Cleveland share employee engagement best practices

In this column, we last discussed the connection stage of employee engagement. By connection, we mean taking a step beyond just presenting information —  the first stage — and promoting interaction and a sense of belonging among employees, helping them make the home-work connection, supporting work-life balance and enabling them to share best practices with their peers and beyond. Deeply rooted connection leads to commitment, our third stage of employee engagement. Commitment requires ongoing interaction, knowledge sharing and reinforcement of a company’s values as they move through their sustainability journey.

CBRE, the world’s largest commercial real estate services firm, has made great strides in engaging its employees to inform and shape its corporate sustainability strategy. In 2007, after a rigorous process to evaluate its impacts and effectively mitigate its carbon emissions, the company committed itself to carbon neutrality. Upon achieving carbon neutrality, CBRE put a great deal of thought into how to go about creating employee enthusiasm and securing commitment from the entire organization to drive forward its sustainability journey.

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Integrated Reporting: What does the future hold?

This week, both GreenBiz.com and CFO.com published blogs about integrated reporting: what is it? what are the benefits? where is it going? GreenBiz.com interviewed Robert Eccles, Professor of Management Practice at Harvard Business School and a driving force on the topic of reforming corporate sustainability reporting over many years, on the aforementioned questions and this is what he had to say…

In writing One Report: Integrated Reporting for a Sustainable Strategy with Mike Krzus, they found that some companies were already producing integrated reports. The fact that the idea of integrated reporting had surfaced both in theory and in practice at the same time was a sign. In 2012, all companies listed on the Johannesburg Stock Exchange were required to filed integrated reports on an ‘apply or explain why not’ basis. Ernst & Young recognized the top 10 companies through their Excellence in Integrated Reporting Awards 2012. Also, the International Integrated Reporting Council (IIRC) published its Pilot Programme 2012 Yearbook, to commemorate its first anniversary and report on the results of the program and its 80 participating companies. Recently, the Sustainability Accounting Standards Board (SASB) was established to focus on giving investors the information they want and need on a company’s environmental, social and governance (ESG) performance so they’re able to make critical business decisions.

Eccles points out that sustainability reports are largely ignored by investors because they don’t provide the necessary financial information investors are seeking. But because integrated reports contain both financial and non-financial information about a company, they are likely to be consumed by all stakeholders. Next year, the IIRC will publish its Draft Framework in April with a final version slated for December. While the IIRC is busy developing the overall structure for integrated reporting, SASB will be developing the standards that can be used for reporting the non-financial information in an integrated report.

Eccles concludes by saying that while the federal government is and should be responsible for mandating ESG reporting and disclosures, he doesn’t think it will happen anytime soon. It’s likely that more and more companies will produce integrated reports on a voluntary basis over the next few years. And, hopefully, companies will be more sophisticated in how they leverage the Internet to make integrated reporting interactive and engaging for stakeholders as a two-way dialogue.

The article on CFO.com entitled “The Value of Sustainability”, expands upon the IIRC’s Pilot Programme and some of its participating companies, such as Clorox, Coca-Cola and Microsoft. A key takeaway from this article comes from Mike Krzus, who says that “CFO involvement is critical to moving forward with integrated reporting. Having the CFO involved in or heading up the integrated reporting effort gives it a level of credibility that publicly traded companies may not have found in having separate sustainability groups.”

All of this being said, what do you think the future holds for integrated reporting? Do you think it’s the right course of action for companies vs. strict sustainability reporting? How quickly will it take off (if at all)? We want to hear your thoughts!