[Join me at TSSS on Feb 5th as we delve into the disconnect between CSR Reporting and Bay/Wall St. – why does it exist and what can we do about it. Click here for details: Bay/Wall Street and Sustainability: Does your CSR Report Resonate with Investors?]
Sustainability reporting in Canada today presents a dilemma. On the one hand, a 2014 study of Canadian reporters by Stakeholder Research Associates Canada (SRA) suggests that a mere 42% of Canadian companies listed on the TSX Composite disclose meaningfully ESG information. SRA’s research also found that among 100 reporting companies across various sectors and geographic regions in Canada, only 20% communicated a long-term strategy informed by targets and goals and only 38% identified their material issues.
These findings align with the 2014 Corporate Knights report that gives the world’s largest companies, including 162 Canadian mid-and-large-cap equities, a failing grade when it comes to adequate disclosure on seven core sustainability metrics. The paucity of corporate reporting, according to the report, “stands in stark contrast to investors’ growing interests in building sustainable investment strategies.” On the other hand, Bloomberg reports a 47% annual increase in use of their ESG data since 2009, and CSRHub, which rates companies based on 12 sustainability indicators, has found that more disclosure correlates with higher perceived CSR performance.
What’s behind these contradictions? Do Canadian companies see the value in issuing sustainability reports? Does the typical sustainability report resonate with the investment community? Are companies finding other ways to engage with their stakeholders on ESG issues of most material importance? How can we ensure that the investment community gets the ESG information it needs to make sustainability-informed investment decisions?
Reporting conversations in Canada now must shift towards understanding the drivers behind reporting and the means by which companies can derive value from the reporting process beyond simply showcasing their sustainability initiatives. Through our research, SRA believes that after 20+ years of reporting activity in Canada, we are at a turning point. Early-adopter companies are stepping back to re-assess the value and benefit of producing annual sustainability reports. RBC, for example, has navigated through a variety of iterations to find a format and reporting cycle that makes sense to their business model and that resonates with stakeholder needs. For 2014, RBC adopted a stakeholder-centric reporting model, aiming their communications modes and information at targeted constituents based on a robust materiality analysis. Other companies, such as Telus, are using technology in new and savvy ways to produce interesting, appealing and interactive reports. The majority of reports reviewed by SRA, however, continue to be text-heavy, kitchen-sink accounts that are neither linked to corporate strategy and goals nor focused on material issues.
And while the GRI has become the gold standard of reporting frameworks – 71% of SRA-studied reporters referenced the GRI – the new kids on the block, SASB (Sustainability Accounting Standards Board) and the IIRC (International Integrated Reporting Council), are garnering attention. With these new frameworks and a plethora of tools available to facilitate the reporting process, isn’t it time for Canadian reporters to get serious about aligning ESG activities with their company’s business strategy and drive performance through ESG goals? And in a multi-channelled communications universe, isn’t it also time for companies to come clean on the value created – or diminished – by their business activities across multiple dimensions that matter to investors in a sustainable future? Without this, sustainability reporting in Canada, or worldwide for that matter, will remain nothing more than a costly exercise in futility.
For more information on SRA’s Tracking Transparency: A Study of Sustainability Reporting in Canada please contact Kathrin Bohr at firstname.lastname@example.org
Kathrin Bohr brings nearly 15 years of experience in the sustainability field to the Stakeholder Research Associates team. She has worked in the private, public and non-profit sectors, most recently as Director of Advisory Services at Intertek Group plc where she worked with international clients on supply chain engagement.