Sustainability: Board Oversight & Disclosure Practices

By Randi Morrison posted 05-16-2017 11:27 AM

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Investors are increasingly focused on sustainability practices, evidenced by the rising number of shareholder proposals related to climate change and human rights - including proposals calling for greater disclosure regarding the management of sustainability-related risks and opportunities, and prompting changes in corporate practices.

According to the recently-released 2016 Board Practices Report, a collaborative board practices benchmarking effort between the Society and Deloitte LLP's Center for Board Effectiveness, nearly 60% of companies provide some form of sustainability disclosure - with 42% providing a formal report, and 28% of companies incorporate specific sustainability-related goals in company strategy - with an additional 9% considering it. However, these overall figures reflect significant variations among company sizes and industry, with 72% of large-caps and 50% of Nonfinancial Services companies issuing formal sustainability reports compared to just 22% and 10% of mid-caps and small-caps, respectively, and 17% of Financial Services companies. Similarly, 49% of large-caps and 34% of Nonfinancial Services companies incorporate specific sustainability-related goals in company strategy vs. just 14% and 5% of mid-caps and small-caps, respectively, and 9% of Financial Services companies.

Additional noteworthy findings include:

- 33% of respondents' boards or board committees are involved in the oversight of the company's corporate social responsibility or sustainability effort and related public disclosures.
- 61% of large-caps have received a shareholder sustainability proposal vs. 20% of mid-caps and zero small-caps.
- Just 2% of respondents said that their board is seeking director with sustainability (including E&S) experience, as reported in this previous Rants to Riches post.

See these recent Society Alert reports: "CSR Disclosure Risks & How to Mitigate Them," "ESG Engagement and Disclosure: Risks & Considerations," "Investors Weigh in on Corporate ESG Disclosures," and "Sustainability & Long-Term Value: Board Considerations," and numerous additional resources on our ESG/Sustainability topical page.

The iconic Society/Deloitte Board Practices Report - which presents findings from a survey distributed to the Society's public company members in late 2016 - covers trends in over 15 areas of board practices and hot topics including cyber risk, shareholder activism, and board diversity.

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