A separate effort spearheaded by former New York mayor Michael Bloomberg will put companies under the gun to report on sustainability issues.
The Sustainability Accounting Standards Board (SASB), formed in 2011, is set to finalize sustainability accounting standards next year. The standards will encourage public firms to incorporate in annual reports issues regarding the environment, human capital, social capital, governance and business models that could have a material impact on financials or operations.
Despite the promising developments, SRI proponents have no illusions about how quickly they can force more responsibility on the markets. Public companies and asset managers have come around grudgingly to SRI principles.
“CEOs of these leading [investment] firms for the most part don’t understand why people want to invest for any reason other than making money,” Schueth said.
Sustainable reporting and shareholder resolutions are on the rise, but they’re not effective, said Katie Schmitz Eulitt, director of stakeholder engagement at the SASB.
While reporting companies all believe the disclosures are effective, just 29 percent of institutional investors have confidence in the reports, she said.
“Public companies really don’t want to disclose anything,” Streur added. Managements are already dealing with disclosure “fatigue” and “they’re not looking for more to do.”
The data standards and metrics for judging SRI compliance are too complex, said Anna Snider, managing director and head of due diligence for the chief investment office of Merrill Lynch.
“The markets are really confused,” Snider said. Are SRI consultants measuring behavior, sustainability, or is it downside mitigation or an opportunity on the upside? “Capital markets are totally confused about what all of this is and how to use it.”
But the interest among investors for socially screened portfolios is growing, Schueth said.