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) Navigating the way to sustainability... G&A serves as Sustainability Headquarters™ for leaders in the corporate, investor and social sectors, providing value-added services focused on ESG/Sustainability issues, including research, monitoring and strategic counsel and advisory services. SustainabilityHQTM (www.SustainabilityHQ.com) Our knowledge. Your opportunity. A subscription-based, Web-accessed platform managed by G&A Institute; SHQ provides key third party organization profiles and tracks the actions of ESG/Sustainability capital market players and investors, and “influencers shaping corporate reputations and valuations. Accountability-CentralTM (www.Accountability-Central.com) For leaders in the era of responsibility & accountability. A publicly-available Web-based information platform for news, updates, opinion & commentary and research resources focused on Sustainability, ESG, Corporate Responsibility issues and topics.