Research - NASDAQ OMX Corporate Solutions

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Corporate ESG / Sustainability Reporting
Does It Matter? Who Cares?
Presented by
Louis D Coppola, M.B.A, Senior Vice President
Governance & Accountability Institute, Inc.
Tel 646.430.8230 x14 Email [email protected] Web www.ga-institute.com
NIRI NY
Baruch College, New York, New York – March 27, 2012
Questions Posted in Research Effort



Does corporate sustainability and responsibility reporting
according to GRI Framework matter to capital market
players?
Do capital market players assign a premium to corporate
issuers that measure, manage and publicly report on ESG
performance?
Does GRI reporting influence credible third parties ranking
and/or rating corporate performance in leading
compilations?
Short Answers… Yes, Yes & Yes
US Companies Looked At

Fortune 500® Companies



Largest in Revenues in USA Stock Performance
Selection by Third Parties for Rankings & Ratings
S&P500® Index Companies

Stock Performance Only
To Determine:
 Was there measurable outperformance if large-cap companies
reported on their ESG KPIs according to the GRI Framework



Fortune 500 Companies examined
S&P 500 Companies Examined
Measured against Equal Weighted Index of
S&P 500 Index for Years 2006-2010
Four Year Performance of
S&P 500 GRI Reporters & Fortune 500 GRI Reporters
VS S&P 500 Equal Weighted Index (S&P 500 EWI)
Indexes
S&P 500
GRI Reporters
Fortune 500
GRI Reporters
S&P 500
EWI Reporters
1 Year
Return
2 Year
Return
3 Year
Return
4 Year
Return
TOTAL
Return
YTD
Return
18.46%
71.29%
4.19%
14.66%
19.85%
4.52%
17.60%
82.11%
7.13%
15.54%
20.72%
3.42%
19.81%
71.64%
1.28%
1.34%
6.66%
4.06%
Given Indicated Outperformance,
Are Fortune 500 Companies
That Are GRI Corporate Reporters More
Likely to be Included in Leading Indexes?

NASDAQ OMX CRD Global Sustainability Index ® (QCRD)
 Yes

Dow Jones Sustainability Index World®
 Yes

Dow Jones Sustainability Index North America®
 No
NASDAQ OMX CRD Global Sustainability
Index ® (QCRD)
Dow Jones Sustainability Index World®
Dow Jones Sustainability Index North America®
Question: What Impact Does
Sustainability & CR Reporting have on
Selection for Third Party Reputational Lists?
Question:
Is there a correlation for corporate GRI reporters and selection for
popular and credible reputational lists and rankings? We looked at
two leading lists with companies ranked.
Answers:
 Yes for Newsweek Greenest Companies in America®
Ranking Top 100 and 500
 Yes for CRO 100 Best Corporate Citizens®
Newsweek Greenest Companies in America®
Ranking Top 100 and 500
CRO 100 Best Corporate Citizens vs. GRI
Question: Does
Sustainability & CR Reporting have an impact
on Sustainability Ratings?
 Yes for CRD’s Sustainable Performance Value® (SPV) –
Smart View 360® Platform
 Yes for Carbon Disclosure Project Score (CDP)
CRD’s Sustainable Performance Value® (SPV) –
Smart View 360® Platform
82% of Non Reporting Companies
Scored Below 50
64% of Reporting Companies
Scored Above 50
Carbon Disclosure Project Score (CDP)
Sector Differences to Consider
Conclusions





Corporate Sustainability and Responsibility reporting according to the GRI
Principles seems to make a difference to investors – reporting companies
are outperforming S&P Index peers in share price performance.
Reporting matters to compilers of leading reporting list and reputational
rankings, and for corporate ratings on ESG performance.
GRI is the standard for ESG/Sustainability reporting – Investors Want
Consistency and Comparability.
GRI has become a global standard for Corporate Responsibility and
Sustainability Reporting – becoming a widely-accepted mechanism to
providing Consistency over the past four years.
US Companies are measuring and managing ESG performance and
reporting to GRI Principles in increasing numbers – but the percentages by
sectors is still low compared to other countries and regions.
Updated Report Coming This Year



Analyzing the S&P 500® Companies in the same way using 2011 reporting
data.
Adding additional corporate rankings and ratings by third parties.
Updated Report will be available July 1st.
News:

G&A Institute is now the USA, UK, and Ireland Data Partner for GRI –
gathering and analyzing corporate reporting results to GRI for
dissemination worldwide.

Providing much more quantitative and qualitative information for the
corporate comparisons going forward.
Coming Soon: US Focal Point / Big 4 / G&A
Trends in External Assurance



External Assurance improves the quality of reporting
and the trust shareholders/stakeholders can place in
the data
Roughly 15% of US GRI Reporters have their reports
externally assured
Worldwide around 50% are assured
Pressing Issues for External Assurance

Confusion in terminology

Who is most qualified to do such reviews?

What are the differences in the levels and scope of
reviews?
About G&A Institute
Governance & Accountability Institute, Inc. (www.GA-Institute.com)
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