S&P 100 companies are embracing the importance of reporting their efforts to promote environmental and social sustainability and transparency in governance. However, companies in emerging markets are lagging far behind.
The assessment was made in two recently released studies by the Social Investment Forum (SIF).
The number of companies submitting standardized reports on social and environmental issues jumped 25% in 2008. At the same time, the number of S&P 100 companies that included some sustainability information, along with their performance in those areas, on their Web sites grew to 93 from 58 in 2004.
"The fact that we saw an increase in companies issuing sustainability reports during one of the world's worst economic downturns clearly demonstrates that sustainability information is not a luxury but extremely relevant to companies and their investors," says Peter DeSimone, SIF's director of programs. "This trend supports the idea that investors look for solid sustainability performance in valuing companies and that more and more companies accept this development and are willing to supply information in this area."
The number of companies using some of the standardized reporting for environmental, social and governance factors, known as the Global Reporting Initiative, increased by 25% in 2008, making comparisons easier. However, only five of the S&P 100 companies provided information in all of the standardized areas. They are American Electric Power Company Inc., The Dow Chemical Co., General Electric Co., International Business Machines Corp. and Weyerhaeuser Co.
At the same time, the top 10 companies in the emerging markets of Brazil, China, India, Indonesia, Israel, Malaysia, Mexico, the Russian Federation, South Africa and South Korea fared poorly in this regard. While 96% reported some indication of governance structure, only a small minority used the standardized guidelines, and only 30% reported any environmental information at all. Companies in Brazil and South Africa reported the most information.
SIF hopes the number of companies reporting on all sustainability factors will continue to increase in the United States and gain more acceptability in emerging markets, DeSimone says. The results of the SIF studies can be found at www.siran.org/projects_s_and_p_reporting_comparison.php and http://socialinvest.org/projects/iwg/documents/EMDP_UNCTAD_REPORT.pdf.