03 Jun Sustainability Reporting: Have You Joined the Bandwagon?
More than 80 percent of S&P 500 companies issued sustainability reports in 2015, according to a recent study by the Governance & Accountability Institute (GAI). That amount has more than quadrupled since the GAI began tracking the prevalence of sustainability reports in 2011. Providing information about sustainable business practices has become increasingly popular as a way to gain a competitive advantage and demonstrate industry leadership. This is particularly true when sustainability information is combined with financial data into an integrated report that is audited by an objective third party.
Financial statements tell only part of the story
Companies publish sustainability reports to show the economic, environmental, and social impacts caused by their everyday activities. They are not mandatory in the United States, but the Securities and Exchange Commission requires U.S. public companies to provide some sustainability-related disclosures in their financial reports.
If you have any doubt about the interdependence of financial and non-financial issues, consider this: environmental issues (such as pollution or carbon emissions), social issues (such as union relations or health and safety matters), and supply chain issues (such as human rights violations or use of conflict minerals) can all lead to fines, remedial costs, and reputational damage. In addition, the sale of toxic or unsafe products can result in product liability lawsuits, recalls, and boycotts.
Benefits often outweigh costs
Measuring, managing, and disclosing environmental, social, and governance performance can yield many significant benefits, including:
- Stronger financial performance
- Enhanced trust
- Improved access to capital & lower borrowing costs
- Better risk management
- Greater employee loyalty
Tracking sustainability also helps companies identify ways to reduce their energy consumption, streamline their supply chains, eliminate waste, and operate more efficiently.
We can help
Sustainability reporting can create long-term value and improve your relationships with investors, employees, customers, suppliers, regulators, and the general public. Contact us for help preparing an integrated sustainability report for 2016 or auditing your sustainability report.