The portion of public company board members who believe that sustainability disclosures are important to inform investors has more than doubled, according to a new survey.
Out of 130 board members surveyed in August by the accounting firm BDO USA, 54% say that disclosures regarding sustainability “are important to understanding a company’s business and helping investors make informed investment and voting decisions,” according to the survey. Last year, just 24% of directors felt that way.
Further, 54% of the respondents said they were against President Trump’s decision to withdraw the United States from the Paris Climate Accord. (See graph below.)
The survey’s authors link the growing interest of boards in sustainability reporting to recent demands for such information on the part of shareholders, citing the demands of Exxon Mobil investors. In May, nearly two-thirds of Exxon Mobil shareholders approved a proposal requiring the energy company to measure and disclose how rules curbing greenhouse gases and new energy technologies could affect the value of the company’s oil assets.
“Other shareholder groups have expressed similar interest in increased disclosures on sustainability matters (e.g. climate change, corporate social responsibility, etc.), and corporate directors have become increasingly receptive to the issue of providing sustainability metrics in financial statements,” according to the report.
The BDO survey finding parallels investors’ surging demand for sustainability data. In its 2016 report on sustainable investing, US SIF, the association formerly known as the Social Investment Forum, reported that investors take environmental, social, and governance (ESG) factors into account across $8.72 trillion of professionally managed assets — a 33% rise since 2014.
Indeed, many money managers are starting to see sustainability data as a proxy for alpha, an indication of above-average returns. In an April equity research report, Goldman Sachs claimed to have found direct links between corporate, environmental, and social factors and company financial performance.
“Our analysis shows that by focusing on a selective suite of key ESG metrics, mainstream investors can add a differentiated and alpha-additive complement of risk analysis to their toolkit,” according to the report. “Where robust data is available, [environmental and social] metrics make a tangible difference to performance.”