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Sustainability reporting in the S&P 500

This week I would like to share some highlights from a recently published report by Teneo, one of the leading CEO advisory firms, on what was seen in 200 sustainability reports from S&P 500 companies published during the first semester of 2021.

Obviously, the US market is much deeper than Mexico’s, and companies are usually larger with more liquid stocks and many more institutional investors around. This translates into more ESG data and some very good examples of what global investors are looking for in a report, especially now that the regulation is pushing initiatives that make some ESG topics a focus. For this reason, we think for all Mexican companies, understanding what is going on in sustainability reporting across the border should be worth their time.

 

Some key snippets:

  • “Institutional investors have dramatically enhanced their focus on issues relating to climate, diversity, human capital management and board governance…”
  • “There has never been a more important time to ensure that company sustainability disclosure is robust, clear and credible…”
  • “No one person can be an expert in “E,” “S” and “G.” Assembling a cross-functional team that includes representation from key business units can help ensure all stakeholder views on ESG issues are being represented.”
  • “Routine engagement with shareholders, employees and other stakeholders is a great opportunity to solicit feedback on your sustainability report.”
  • 84% of the sustainability reports that were studied were published by a company with a market cap larger than US$10bn.
  • “Sustainability” was the most commonly used term in report titles (43%), while “CSR” and “ESG” appeared in the report title 24% and 23% of the time, respectively. Regardless of what your company’s sustainability report is titled, companies should be consistent with how they refer to their sustainability initiatives in all of their company communications.
  • The average length of a 2021 Sustainability Report was 70 pages, but they ranged from a low of 12 pages to a high of 243 pages.”
  • “76% of 2021 Sustainability Reports were accompanied by a press release. The press releases typically included a quote from the CEO and/or sustainability lead as well as highlights from the sustainability report.”
  • “…companies are thinking about creative ways to deliver updates to sustainability initiatives beyond the annual cycle of sustainability reports, such as interim sustainability updates or issue-specific reports (e.g.; diversity).”
  • “Over one-third of 2021 Sustainability Reports included at least some information on employee pay gaps. 30% reported both the gender pay gap for employees globally…”
  • “Over half of 2021 Sustainability Reports included at least one demographic target, with 42% of companies including both gender and racial/ethnicity goals.”
  • “…a vast majority of companies referenced the SASB and TCFD. This is a result of many large institutional shareholders essentially mandating that companies report to these disclosure frameworks.”
  • “53% of 2021 Sustainability Reports included at least some degree of external assurance.”
  • “26% of 2021 Sustainability Reports were accompanied by a separate “Summary” or “Highlights” version of the report.”

 

Similar to what companies are hearing from investors in the US, local investors in Mexico (mainly AFOREs) are pushing for more and better sustainability disclosure. As we have seen in the updated ESG Development heatmaps we have recently published (and as we will most likely see in the ones we will publish in coming blogs), companies are responding to this by aligning to recognized standards (SASB, TCFD) and adding more KPIs to describe what they are doing and what they intend to achieve in the material ESG topics they are working on.

We would be happy to help any company define how they can improve their sustainability reporting and align with global best practices to become a leader within its segment. We understand there are many complex decisions when defining what to report and how (like should reports be integrated or sustainability focused, see our thoughts here), and we are focused on finding practical ways to optimize the impact our clients have with their ESG communication strategies.

I hope you found this interesting. As usual, if there is anything we can help you with, or if there is an ESG topic you would like to know more about, please let us know.

Best,

Marimar

CEO, Miranda ESG

Contacts at Miranda Partners

Damian Fraser
Miranda Partners
damian.fraser@miranda-partners.com

Ana Maria Ybarra Corcuera
Miranda-IR
ana.ybarra@miranda-ir.com

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