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Market News

 May 02, 2007
Half of S&P 100 report on ESG performance

 Boston, USA (GLOBE-Net) -- An annual survey by The Social Investment Research Analysts Network (SIRAN) and KLD Research & Analytics, Inc. reveals that nearly half (49) of US companies in the Standard & Poors (S&P) 100 Index are now disclosing information about their environmental, social, and governance (ESG) performance.

Eleven companies issued comprehensive ESG reports for the first time. More than a third of the companies (38) stated they have adopted the internationally recognized reporting standard established by the Global Reporting Initiative (GRI).

The GRI's Sustainability Reporting Guidelines provide corporations a framework to report on issues such as climate change, corporate governance, social concerns and environmental impacts.

According to KLD President Peter Kinder, the latest study confirms that reporting on sustainability issues has moved into the corporate mainstream. Investment industry experts commenting on the study noted that a "tipping point" may have been reached, predicting that ESG reporting will become standard business practice in the near future.

Specific findings of the SIRAN-KLD study on corporate social responsibility include:

  • A 14% increase of S&P 100 companies issuing sustainability reports over the previous year's study;

  • Eleven new companies issued comprehensive sustainability reports for the first time, including Bank of America, Caterpillar, Cisco, Heinz, Merck, and Xerox. Some of these companies had previously released topical reports covering environmental health and safety or philanthropy data in previous years, but this study recognizes only those reports covering a broader spectrum of Environmental, Social and Governance (ESG) data;

  • More than a third of S&P Index companies said they based their sustainability reports on the widely recognized external standard for reporting, the GRI Sustainability Reporting Guidelines. The nearly 12% increase over the previous year reflects a concerted outreach effort by SIRAN members to promote reporting based on the GRI;

  • More than three quarters of the S&P 100 companies (79) have special sections of their websites dedicated to sharing information about their social and environmental policies and performance. This figure is unchanged from the previous year's study.

SIRAN and KLD noted that the year and a half time frame for the study (from June 2005 to December 2006) and the October 2006 publishing of the updated GRI guidelines have influenced the upward trends. The previous year's SIRAN-KLD study covered the one-year period from June 2005 to May 2006.

Yet overall, a variety of sectors - finance, manufacturing, food and beverage, automotive, and healthcare - are improving transparency and reporting of ESG performance, say the study authors.

The increase is in response to a growing recognition among investors and corporate executives that environmental, social and governance performance have long term financial impacts. ESG factors are now being viewed as both business risks and opportunities.

Investors and shareholders are therefore demanding better information and transparency related to ESG issues, and in many cases requesting improvements in business strategies. Reporting on sustainability performance has become a best practice among the world's leading companies, and it is possible that ESG information may one day be standardized and reported on as thoroughly as financial details.

KLD Research & Analytics, Inc. is an independent investment research firm providing investment management tools for strategies based on social and environmental responsibility.

SIRAN is an analyst network that supports more than 150 North American social research analysts from 30 investment firms, research providers, and affiliated investor groups, and is a working group of the Social Investment Forum.



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