Redefining Sustainability Reporting and the Businesses Who are Leading the Pack

Mathias Lelievre, President & CEO at ENGIE Insight

This week CDP released their 2018 climate change, deforestation and water security scores and I couldn’t be more proud to see so many ENGIE Insight clients on the list of respondents. While some are still more talking than acting about sustainability, these companies are taking real operational steps every day, navigating the sustainability transformation. And what’s equally as motivating, in 2018, over 7,000 companies, representing over 50 percent of global market capitalization, disclosed their environmental data through CDP’s online platform, an 11 percent increase from 2017.

Like our clients, many U.S. companies are going against political winds and adopting leading commitments that support the goals of the 2015 Paris Agreement as well as the UN’s Sustainable Development Goals (SDGs). These leaders have identified that committing to climate action is good for business, and many organizations are following suit. As investors demand more transparency and ESG metrics become more widely available, non-financial disclosures are no longer merely a ‘nice to have,’ but an essential indicator of long-term resiliency. According to a 2017 CDP report, “Key Findings on Governance, ESG and the Role of the Board of Directors,” a 2016 analysis by Blackrock of more than 160 academic studies demonstrates that companies with high ratings on ESG factors have a lower cost of capital, while separate research finds that greater transparency of public companies in disclosing non-financial (ESG) data results in lower volatility.

Companies that respond to CDP also have seen a 67 percent higher return on equity than their non-responding peers.

Going Beyond Performance Reporting

As the trend to disclose ticks upward, we’re also seeing an evolution in disclosure requirements. Today’s investors are demanding more, pushing companies to go beyond disclosing emissions data alone toward strategic planning and risk management. These investors are looking for evidence that companies understand the financial risks they face because of climate change and have engaged their leadership to address them. As a result, sustainability reporting frameworks such as CDP, Global Resource Institute (GRI), and Global Real Estate Sustainability Benchmarking (GRESB) have introduced new reporting requirements, driving organizations to identify risks, engage their board of directors, and set evidence-based emissions reductions targets. The IRRC Institute reported that in 2017, 67 percent of responding companies surveyed set quantified and time-bound environmental goals.

3 Reasons Why Your Company is Ready to Disclose in 2019

1. Awareness leads to opportunity

Whether it’s the opportunity to please investors by avoiding financial risk or the opportunity to leverage your sustainability actions as a competitive differentiator in your marketing, your businesses has the ability to unlock new opportunities when you’re informed and transparent. In fact, 87 percent of companies responding to CDP identified business opportunities and are taking action to address climate risks.

2. Your customers are demanding sustainability

As the millennial generation claims their economic impact they’re turning their purchasing power towards brands who act on sustainability. A recent survey found that 81% of millennials even expect their favorite companies to make public declarations of their corporate citizenship.

3. Progress is pushing forward, don’t be left behind

Regardless of the current political winds around climate action, many businesses are acting now and making bold moves. 832 companies with We Mean Business have pledged and those companies who do not prioritize sustainability action will soon be left behind.

Whether you are mature in your sustainability efforts or just beginning, it is important to recognize the growing demands your organization will face. Now is the time for businesses to act and reframe the way we think about sustainability. Congratulations to all businesses who are taking the proactive step to disclose.

And to help you learn more about the Evolution of Disclosure, we’re hosting an upcoming Webinar on February 13th featuring CDP’s VP of Global Initiatives, Sara Law, and our very own Senior Carbon Analyst, TJ Schmidt. Please take the time to tune in – register here.

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