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NEW YORK – Environmental, social and governance (ESG) initiatives are increasingly important to public companies, but uncertainty around how to report ESG activities underscores a clear need for better regulatory guidance. This according to a new report released today by Intelligize, an industry-leading provider of corporate compliance management solutions.
According to The Conscience of Corporations: Public Company ESG Adoption, three-quarters of recently surveyed public company representatives have a desire to create positive ESG outcomes. Those desires, however, are tempered by a lack of knowledge about important ESG issues, including how costs affect their companies’ commitments, whether ESG-related information should appear in their financial reports, and whether their ESG reporting is even accurate.
The report reflects the findings of a recent Intelligize survey of C-suite executives and compliance, investor relations, accounting, and legal professionals on the ESG activities of a broad spectrum of public companies.
“A recurring theme we found in our survey responses was a lack of clarity surrounding the ESG reporting process and questions about whether ESG reporting presents an accurate picture of companies’ core values,” said Rob Peters , a report coauthor and a senior director at Intelligize. “Companies overwhelmingly seek direction on ESG disclosure practices, and it will be interesting to see if and when the Securities and Exchange Commission will provide it.”
Commitment to ESG: Seventy-five percent of survey respondents indicated their companies are undertaking ESG initiatives primarily based on a desire to create positive outcomes. But further data reflected uncertainty about the depth of that commitment, including how financial costs affect the level of ESG investment and the lack of tie-in at many companies between executive compensation and ESG incentives or metrics.
ESG Reporting Process: The lack of a regulatory framework for ESG disclosure was illustrated in responses about the format companies use to report ESG outcomes. A plurality of respondents (nearly 42%) indicated that their companies’ financial reports should include ESG disclosure; at the same time, a sizable percentage of respondents remained undecided on that issue. In the absence of clear mandates, a majority of respondents reported taking cues from peer companies’ disclosure and from ESG frameworks outlined by nongovernmental organizations.
ESG Reporting Substance: Slightly more than a majority of respondents indicated that ESG reporting should appear in proxy materials over 10-K filings – a possible reflection of investors’ intense interest in ESG issues. More than 60% of respondents think their companies’ ESG reporting is at least somewhat informative. But fewer than half (49%) of respondents believe the ESG reporting accurately reflects their companies’ values, and 35% are unsure.
The full report can be accessed here and the report’s authors are available for comment or interviews on the report’s findings.
About LexisNexis Legal & Professional
LexisNexis Legal & Professional® is a leading global provider of legal, regulatory and business information and analytics that helps customers increase productivity, improve decision-making and outcomes, and advance the rule of law around the world. As a digital pioneer, the company was the first to bring legal and business information online with its Lexis® and Nexis® services. LexisNexis Legal & Professional, which serves customers in more than 160 countries with 10,400 employees worldwide, is part of RELX, a global provider of information-based analytics and decision tools for professional and business customers.
Intelligize is the leading provider of best-in-class content, exclusive news collections, regulatory insights, and powerful analytical tools for compliance, transactional and investor relations professionals.
Intelligize offers a web-based research platform that ensures law firms, accounting firms, corporations, and other organizations stay compliant with government regulations, build stronger deals and agreements, and deliver value to their shareholders and clients.
Headquartered in New York City, Intelligize serves Fortune 500 companies, including Starbucks, IBM, Microsoft, Verizon and Walmart, as well as many of the top global law and accounting firms.
In 2016, Intelligize became a wholly owned subsidiary of LexisNexis®, a leading global provider of content-enabled workflow solutions designed specifically for professionals in the legal, risk management, corporate, government, law enforcement, accounting and academic markets.
For more information, visit www.intelligize.com
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