Boosting the signal-to-noise ratio in IT sustainability reporting
Given the rapid pace of technological evolution, the impacts of technology and communications on society are profound, and quickly changing. But so are its potential contributions -- and there is no shortage of global challenges this sector can help to solve.
Information technology is credited with many of today’s social and political movements. Traditional barriers -- physical boundaries within and across countries, races, ages and core beliefs -- are giving way to an era of open communication and transparency which is as innovative as it is disruptive.
The Sustainability Accounting Standards Board (SASB) standards are unleashing a quiet revolution of their own. In May, SASB convened a group of 230 people whose organizations represent $2.9 trillion in assets under management and $1.8 trillion in market capital. In working groups, they helped to establish sustainability accounting standards for the technology and communications sectors. They weighed in on standards for the disclosure of material environmental and social governance (ESG) issues for six industries, including telecommunications, semiconductors and Internet media and services. While it may not sound like a revolution, the impact of SASB standards on advancing transparency and performance on ESG issues should not be understated.
SASB’s research in this sector -- outlining the ESG issues material to companies within -- revealed great examples of leadership. Companies recognized that in order to remain competitive, they need to innovate on material issues such as digital inclusion; talent recruitment, development and retention; and sustainable energy management. Here are just a few examples.
• Achieving many Millennium Development Goals hinges upon advances in and new applications of technology and communications. In its e-inclusion initiative, HP bridges the digital divide by delivering sustainable information solutions targeting the 4 billion low-income people in developing nations in Africa, Asia, Central and Eastern Europe, Latin America and the Middle East. For many, these efforts will open the door to information about social and economic opportunities. This initiative is expected to drive growth in revenue and profit, and strengthen HP’s position in emerging economies for traditional products and services.
• In 2011, Microsoft and Comcast each announced programs to help low-income students access broadband Internet and computers. Over three years, Microsoft’s “Shape the Future” program will increase 1 million students’ access to Windows-based PCs, broadband Internet access, Microsoft education software and job skills training. These are our future employees and investors.
• Energy independence is at the heart of these companies’ futures. Google installed a 1.7 MW solar power installation on its campus in 2007, demonstrating that a capital investment of $25,000 for data center energy-efficiency retrofits led to an annual energy savings of $67,000.
While it’s affirming to see some companies taking a leadership position in sustainability and disclosure, it’s not enough for a few companies to lead. Entire industries need to shift, and that takes action by investors. Ninety-two percent of investors disagreed that current reporting is sufficiently comparable, according to a recent study by the Association of Chartered Certified Accountants. And 92 percent of investors agreed that financial and non-financial information should be more integrated. It’s a call for SASB standards for disclosure, and we’re here to answer it.
SASB is not about doing more reporting. Instead, it’s about changing the signal-to-noise ratio to amplify the sustainability issues that affect risk mitigation and long-term value creation. There’s a lot of data out there, often packaged in beautiful reports. But how can investors determine what matters, relative to companies in a given industry? And once we determine that, how do we benchmark and compare companies industry by industry?
That’s what will spark innovation and improve performance. In the words of New York State Controller Thomas DiNapoli, “We need to continue to grow an army of investors who believe, as I do, that through responsible investing, we can create a stronger, more sustainable economy for everyone.”
The SASB welcomes your participation. Register for our working groups for the non-renewables sector (starting Aug. 5), download our standards for the health care sector (available July 31) and comment on our standards for technology and communications (this fall). Together, we'll help more signal emerge from the noise.
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