ThinkTWENTY20

Environmental, Social and Governance (ESG) reporting by corporations was once of interest to a small group of investors and others. Now, with the growing interest in environmental concerns, ESG has become a major area of interest. Companies have long had to report to their investors, but according to Chris Ruggeri, national managing principal at Deloitte, in reporting on Deloitte’s recent CEO survey, “CFOs and IROs have a growing list of stakeholders beyond Wall Street: customers, employees, vendors, regulators, philanthropists, social responsibility monitors and others who want to know how their company’s strategy and financial performance are benefiting their community and the world at large.”[1] 

According to a report from Morgan Stanley, the number of S&P 500 companies publishing some form of ESG disclosure increased from 20 percent in 2011 to 86 percent in 2018, a massive change for companies. And stakeholders are making use of the information by broadening the range of metrics used in evaluating corporate performance. This is consistent with the recent statement of the Business Roundtable on the purpose of a corporation, which can be found on its website. It broadens the purpose of companies well beyond simply making money, although that is of course still central and very important, but does include the idea of supporting the communities in which they work, respecting the people in their communities and protecting the environment by embracing sustainable practices across their businesses.

High flying rhetoric to some, perhaps, but it is signed by 181 CEO’s and the Roundtable is a very influential source.  

[1] IR Magazine, “Activism, guidance and purpose: The IR issues on the minds of CFOs”, Chris Ruggeri, Feb 19, 2020