Sustainability Data Are Driving Disclosure
As cited in The Environmental FORUM, March/April 2016
Jeff Smith
Environmental law now sits at the busy intersection of “we manage what we measure” and “sunlight is the best disinfectant.” These are the directional signs for the task of directing businesses and conserving the Earth’s resources through sustainability. Participants in the global capital markets, the vehicle through which significant private, semi-public, and government money will be allocated, have already begun to engineer, and then label, the way that companies with leading, comprehensive sustainability strategies can be recognized and rewarded. Inevitably, part of this effort entails massive, and pioneering, data gathering and disclosure, of the type championed by the Global Reporting Initiative.
More recently, it has inspired the transparent and collaborative efforts of the Sustainability Accounting Standards Board, which has created industry- specific metrics tied to the SEC- driven definition of materiality— information whose omission or disclosure would have been viewed by a reasonable investor as having significantly altered the total mix of information available in decisionmaking. The related banking and investment management infrastructure has also proliferated.
There are over 1,400 signatories to the sustainability-driven U.N. Principles for Responsible Investment, and over 700 asset management firms incorporate some elements of sustainability into their decisionmaking and portfolio mix. New entities such as Cornerstone Capital make sustainability the explicit focus of their investment, money management, and research activities. Dynamic benchmarking firms such as eRevalue allow instant evaluative access to the disclosure practices and histories of companies throughout global markets.
