This new report: "A Survey and In-Depth Review of Sustainability Disclosures by Small- and Mid-Cap Companies," co-authored by White & Case and the Society for Corporate Governance, reveals the results of a review and analysis of small-cap and mid-cap companies' (between $500 million - $10 billion) website sustainability disclosures. Of the 80 reviewed companies, 41 companies (51%) provided website sustainability disclosure ranging from a paragraph to a standalone sustainability report. This compares to 35% of reviewed companies in 2019.
Key takeaways and trends among those 41 companies that provided website disclosure include:
- Industry: Of five industries represented: Energy, Life Sciences, Retail, Services, and Technology, disclosure was most prevalent among Retail companies (6 of 6 companies) and Energy companies (12 of 13 companies), with Energy companies focusing predominantly on environmental issues and Retail companies focusing on environmental sustainability, employee engagement, human rights, and supply chain management.
- Market Cap: Disclosure was more prevalent among companies with higher market caps; however, the greatest increase in disclosure relative to 2019 was among companies under $1 billion (25% of surveyed companies in 2019 compared to 50% of surveyed companies in 2020).
- Company lifecycle: More mature companies were much more likely to provide sustainability disclosure than less mature companies. 83% of companies that had been public for over 10 years provided disclosure vs. 24% of companies that had been public for three years or less.
- Topics: The most common types of disclosure were (in order of prevalence): (i) human capital management, (ii) environmental; (iii) community impact and philanthropy; (iv) ethical business practices; and (v) current social and economic issues (COVID-19 and Black Lives Matter). The report includes sample disclosures reflecting each of these categories.
- Reporting standards: 22% of companies disclosed reporting standards they consulted or used in whole or in part. The GRI standards were the most commonly cited framework.
- Disclaimers: Seven companies accompanied their ESG disclosure with "safe harbor"-type disclaimers. The report includes helpful guidance on this point.
Among other instructive takeaways, the publication advises companies considering E&S/sustainability disclosure to: (i) identify and assess their key risks, opportunities, and priorities before deciding what information to voluntarily disclose; (ii) understand and be responsive to investor wants/needs; (iii) assemble an internal team with representation from multiple function areas to determine the content and sources of information and review any proposed disclosure; (v) reflect progress in, and continuity of, disclosure over time; (v) implement appropriate controls to process, summarize, assess, and review the accuracy of all disclosures with the same level of diligence as is conducted for the company's financial disclosures; and (vi) include a forward-looking statements legend.
Access numerous additional resources on our Sustainability/ESG page. This post first appeared in the weekly Society Alert!