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Study on the state of integrated reporting and sustainability reporting in the United States

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Apr 30, 2013

The Investor Responsibility Research Center Institute (IRRCI), a not-for-profit organization funding objective research focused on corporate governance and responsibility, has released a report "Integrated Financial and Sustainability Reporting in the United States" that finds that all but one S&P 500 company reports some form of sustainability disclosure. However, even though sustainability reporting as such is widespread, the extent, quantification, and connectivity can still be much improved.

In numbers, the study finds that:

  • 499 of the companies in the S&P 500 made at least one sustainability related disclosure, but only 7 integrate financial and sustainability reporting.
  • 74 percent of the companies quantified at least one sustainability-related initiative financially, although they frequently also mentioned other initiatives without quantification.
  • 43 percent of the companies linked executive compensation to some type of sustainability criteria.

The following topics were most often reported on (in descending order): environmental management, employment, climate change, hazardous waste, product formulations, waste management, water use, ethics, and human rights.

However, although the report shows that disclosure of sustainability information across a wide range of topics per se is commonplace today, it also states that:

[I]solated sustainability disclosures are of limited value, both to corporate managements trying to improve the bottom line and to investors trying to gauge risks and opportunities. The challenge today is to connect the dots between sustainability initiatives and corporate earnings and then to quantify the causal relationship. . . . For far too many sustainability factors, across far too many reports, quantification is lacking, leaving managers without tools and investors to wonder how carefully they are being managed.

The report also includes a review of existing regulatory requirements and an overview of current efforts to advance integrated reporting for example by the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards Board (SASB).

The IRRCI offered a webinar on May 3, 2013, to review the findings and respond to questions regarding the report. Registration for the webinar is possible through the press release on the IRRCI's Web site.

Click to download the full report (link to the IRRCI's Web site).

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