Study

Global Corporate Leaders Leave Investors Blind on ESG - Seite 4

DAX Allianz 44 S-NFR T-9 DAX Merck 44 S-NFR  

Of the worst 10 reports, six came from the Dow Jones. Also, the Dow Jones companies delivered the least comparable and transparent information overall among all four indices with an average GEM reporting score of 23 out of a maximum of 66 points.

Says David Fuscus, CEO and President of Xenophon Strategies, a strategic communications firm headquartered in Washington, D.C.: "U.S. companies need to step up their game in ESG reporting. Without transparent reporting, investors and others don't know how to gauge a corporation's work on environmental, social and governance issues. Europe does a much better job that the U.S. and it is time for American companies to create greater trust between the private, public and civic sectors."

Stakeholders still not taken seriously enough

The study highlights the lack of information about stakeholder involvement when it comes to ESG issues. Says Mark Paterson, principal of corporate sustainability specialist Currie: "Global standards make stakeholder dialogue a priority for sustainability reporting, yet a weakness in reporting common to all regions is transparency around stakeholders. How stakeholders are identified is not disclosed in four out of five reports. Also, companies are much more likely to report on how issues are being managed rather than naming the issues raised by stakeholders."

Although over 60% of all reports provide general information on ESG stakeholder dialogue, only 42% disclose details about the company's approach to stakeholder engagement. Only 18% disclose how companies have responded to ESG issues raised by their stakeholders.

Appropriateness: SASB criteria rarely fulfilled

To find out to what degree companies are disclosing widely accepted financially material information in their ESG reporting, the analysts looked through the lens of the Sustainability Accounting Standards Board (SASB). SASB Standards identify the subset of environmental, social, and governance issues most relevant to financial performance in each of 77 industries defined by SASB's Sustainable Industry Classification System (SICS(TM)).