Corporate Reporting on Sustainability Still Limited

Corporate reporting on sustainability goals and practices is still limited, according to new research from the Economist Intelligence Unit.

 

The global study finds that only 18% of firms surveyed publish their targets and performance in meeting environmental, social and governance sustainability (ESG) goals on an annual basis.

 

According to the study, 40% of executives do not currently publish information on their sustainability practices and have no plans to do so. However, in a sign of growing recognition in the developing world of the importance customers and other stakeholders attach to sustainable business practices, companies there show greater willingness to make public their sustainability goals in the near future than those in industrialised countries. In developing countries, 45% of all those who do not currently publish their results for sustainability practices say they plan to do so in the next two years, compared to only 19% in developed countries.

 

Globally, 78% of respondents say that a focus on sustainability will be important for their firms in the coming three years, while in developing economies, the figure is 85%. Emerging market firms see sustainability-oriented ESG practices as a chance to bolster relations with customers and investors in developed economies.

 

Fifty-four percent of executives say customers have the strongest influence on their ESG policies—more than any other stakeholder. Experts caution that consumers are fickle. However, the influence of regulators and investors appears to be growing.

 

The study also finds that 44% of executives say immediate financial goals are an obstacle to sustainability. Many managers fail to see the opportunities: only 14% see a link between sustainability and short-term profit, even though some ESG initiatives pay off in under a year.

 

Among large firms (US$1 billion - $5 billion in global annual revenue), 35% report ESG sustainability information annually, yet only 18% publish an integrated financial and sustainability report. Not all executives agree on the merits of integrated reporting: Some business leaders cite the advantages of targeting individual stakeholder groups with information most relevant to them.

 

Just 22% of executives say sustainability is a fundamental part of their risk management programmes; 35% have more of an ad hoc approach. Only 22% expect to begin including sustainability in their risk management in the future.

 

Meanwhile, 76% of executives agree that sustainability is a pre-requisite for long-term growth. Similarly, mainstream investors are paying closer attention to sustainability practices. One implication is that poor performance on sustainability could restrict access to capital.

 

 

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