Today's Ceres Conference in San Francisco was host to a lively panel discussion on sustainability reporting. Paul Hilton, director of Advanced Equities Research at Calvert moderated a panel of speakers representing industry, accounting, data management and policy.
Sustainability disclosure has come a long way, and not surprisingly, has a long way to go yet.
Panelists represented the leading edge in reporting and discussed both what excites them and what needs to happen to push forward.
Hilton opened the panel with his top five trends promoting a better disclosure landscape:
- Movement towards mandatory disclosure
- Improvements in frameworks/tools for reporting
- Increased corporate interest in improved reporting
- Active ownership
- Mainstream investors demanding data
Beth Holzman, CSR strategy and reporting manager at Timberland, explained what's happening at the leading edge of corporate reporting. Emil Efthimides, manager of the Environmental, Social and Governance Data Project at Bloomberg, discussed Bloomberg's current work to organize the world of ESG data. Jonathan Jacoby, senior policy advisor for Oxfam America’s Private Sector Department brought a policy perspective, but unfortunately didn't get much of a chance to speak. And the fourth panelist, Alan Willis, sustainability advisor for Canadian Institute of Chartered Accountants, made inroads to public forgiveness for the glaring missteps by some in his field.
What are the exciting developments in ESG disclosure? New reporting tools and mediums, more audiences, varying mediums to reach varying audiences, and imperative to demonstrate increased consumer relevance topped Holzman’s list of developments.
Willis described a recent CFA investor manual to help integrate ESG into accounting work, as well as clever user websites. "On the HP website you can create your own sustainability report by customizing the bits you want. There are traps and pitfalls of course, but I find this otherwise encouraging," Willis explained. "What I'd like to see is better progress around sorting [that information] out -- we are all over the map in terms of what companies are doing. The credibility of our numbers has a long way to go."
Efthimides described how Bloomberg is continuing to revolutionize financial markets with transparency of information. "Now we are looking at the ESG world, scraping all data available and putting it together and making it all available," Efthimides explained. "Eleven percent of assets under management are socially responsible. Now the other 89 percent will get a chance to see that 11 percent. Maybe they’ll dabble in it or even request that information from companies. It will become a virtuous cycle.”
Timberland's advanced practices were the spotlight of much of the conversation. Holzman explained how they've recently moved from the annual CSR report to quarterly reporting of 15 key performance indicators. "This way we have more opportunities to communicate performance through more frequent disclosure." They also put out a complementary bi-annual CSR report and host quarterly CSR conference calls with Timberland's CEO. People can join the call, and if they miss it they can listen to and respond to the calls on a third-party site, JustMeans, creating an open dialogue. Timberland has created a label on its products that reports on impact on climate, use of chemicals and use of renewable resources, but "this is irrelevant if no one else shows that information. Consumers are starting to be hungry for this information," Holzman explained.
Uniform reporting language was also a topic of conversation. Efthimides described the XBRL, a standardized business reporting language which is taking hold in several Asian countries. It simplifies and standardizes business and financial information. I certainly hope we adopt XBRL in the U.S., but Willis warned it will not happen quickly.
Finally, panelists discussed with the audience the movement from voluntary to mandatory sustainability reporting. An audience member from the Global Reporting Initiative explained that the group is starting to discuss mandatory reporting. In Sweden, for example, state-owned enterprises are required to produce sustainability reports.
So we are making progress, but we have a long way to go. And reporting is just the first step -- there is no point in reporting if it does not influence management such that actual environmental impacts are minimized, and social and human factors are valued.
Image by Gastonmag.