Executive summary [Download the full report]
Imagine a world in which you are at the center of a corporate reporting process that is focused on value creation: value creation in relation to your customers, critical resources, intellectual capital and your company’s position in society.
Picture yourself managing the data, processes and controls used to assess all that is of material interest to investors and other stakeholders. Your role is more than just reporting the change in financial value; it also includes reporting on all material values created or consumed by your company.
Is that your world currently? It could be.
Sustainability is “an approach to creating long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental, and social trends and challenges.”1 Currently, sustainability reporting is not required or regulated in the U.S. However, interest is growing around issues such as resources consumed and value created (or destroyed), as well as intense scrutiny of more diverse stakeholder groups.
This report gives insight on the current state of sustainability reporting among SEC registrants and highlights unregulated proposals and frameworks. The data comes from in-depth interviews conducted by Financial Executives Research Foundation Inc. (FERF) and Grant Thornton LLP, as well as a review of more than 25 Fortune 500 companies’ publicly available sustainability reports.
Our featured findings:
Financial executives are not as involved in corporate social responsibility matters and reporting as perhaps they should be.
- The finance function’s involvement in sustainability reporting (internal and external) adds credibility and confidence in the measurement, data collection and analysis processes.
- Stand-alone sustainability reporting will become accepted practice, but it is likely to be an interim step.
- Reporting that integrates sustainability and social responsibility with financial goals and results to describe for all stakeholders the company’s past and future creation of value is likely to be the ultimate objective.
- Financial executives need to play a greater, if not leading, role in these developments.
What is sustainability and corporate social responsibility (CSR)?
“An approach to creating long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental, and social trends and challenges.”
– Dow Jones World Sustainability Index
“Meeting the needs of the present without compromising the ability of future generations to meet their own needs.”
– United Nations
“A way of doing business that creates profit while avoiding harm to people and the planet.”
– The Center for Sustainable Enterprise at the University of North Carolina’s Kenan-Flagler
“Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.”
– U.S. Environmental Protection Agency
1 Defined by the Dow Jones Sustainability Index. See www.sustainability-indices.com.
Download the full report