Companies are, on the whole, doing the least they can get away with in terms of revealing their exposure to risks and other effects of sustainability-related issues, denying investors the level of information they need to make considered decisions, according to a new report.
The Sustainability Accounting Standards Board (SASB) on December 1 released its first annual report analyzing the effectiveness of sustainability disclosures. The research is based on the latest Form 10K or Form 20F SEC filings for the top companies in a variety of industries. SASB develops sustainability accounting standards designed to help public corporations report material information to aid investors.
Among other things, the report finds that:
Overwhelmingly, companies recognize the existence of, or the potential for, material impacts related to the sustainability topics included in SASB standards – 69 percent of companies studied report on at least three quarters of the sustainability topics included in their industry standard, and 38 percent provide disclosure on every SASB topic
But the most common form of disclosure uses generic boilerplate language, which SASB says is inadequate for investment decision-making. Such non-specific information is used 53 percent of the time when companies address an SASB topic
Companies use metrics, which are described as more useful to investment analysis, in less than 24 percent of cases, though even then the metrics are non-standardized and so cannot be compared across industries.