More than 80% of S&P 500 companies issued sustainability reports in 2015, according to a recent study by the Governance & Accountability Institute (GAI). That amount has more than quadrupled since the GAI began tracking the prevalence of sustainability reports in 2011. Providing information about sustainable business practices has become increasingly popular as a way to gain a competitive advantage and demonstrate industry leadership. This is particularly true when sustainability information is combined with financial data into an integrated report that’s audited by an objective third party.
Financial statements tell only part of the story
Companies publish sustainability reports to show the economic, environmental and social impacts caused by their everyday activities. They aren’t mandatory in the United States, but the Securities and Exchange Commission requires U.S. public companies to provide some sustainability-related disclosures in their financial reports.
If you have any doubt about the interdependence of financial and nonfinancial issues, consider this: Environmental issues (such as pollution or carbon emissions), social issues (such as union relations or health and safety matters), and supply chain issues (such as human rights violations or use of conflict minerals) can all lead to fines, remedial costs and reputational damage. And the sale of toxic or unsafe products can result in product liability lawsuits, recalls and boycotts.
Benefits often outweigh costs
Measuring, managing and disclosing environmental, social and governance performance can yield many significant benefits, including:
- Stronger financial performance,
- Enhanced trust,
- Improved access to capital and lower borrowing costs,
- Better risk management, and
- Greater employee loyalty.
Tracking sustainability also helps companies identify ways to reduce their energy consumption, streamline their supply chains, eliminate waste and operate more efficiently.
We can help
Sustainability reporting can create long-term value and improve your relationships with investors, employees, customers, suppliers, regulators and the general public. Contact us for help preparing an integrated sustainability report for 2016 — or auditing your sustainability report.
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