This report is the fourth instalment of an annual series that tracks the extent to which the world’s publicly traded companies are disclosing the seven basic or “first-generation” sustainability indicators, namely: employee turnover, energy, greenhouse gas emissions (GHGs), injury rate, payroll, waste and water.

The analysis is conducted at the level of individual stock exchanges (45 in total) and is based on 2013 disclosure rates.

Two interesting data points emerged from the report. The study found that although the number of large companies disclosing basic sustainability indicators is increasing, the rate of uptake is flatlining. For example, the rate of increase in GHG reporting over the period 2009–2010 by the world’s large companies stood at 17%. The corresponding figure for the period 2012–2013 has slowed by two-thirds, down to only 6%. There is a similar slowdown in reporting occurring on the other sustainability indicators.

Another notable development concerns disclosure incentives. All 10 top-ranked exchanges are located in countries with sustainability disclosure policies that are mandatory, prescriptive and broad. One example was the London Stock Exchange, which jumped four places to fifth overall on the back of strong improvements on GHG disclosure, following the discussion to the 2013 update of the UK Companies Act 2006, requiring listed UK-incorporated companies to disclose GHGs.

The report’s recommendations center around this point, urging policy-makers, investors, stock exchanges and securities regulators around the world to disclose sustainability information in a timely manner.

“This is the fourth of these reports – and it means we can begin to see which combinations of regulations and voluntary incentives effectively promote disclosure,” explains Aviva Group CEO Mark Wilson in the report. “Although I am a supporter of market forces and lean regulation, it is clear that regulation in this particular area leads to more disclosure than voluntary mechanisms.”

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Current business-as-usual projections put us on track for a world of deep climate disruption with grave economic implications for long-term investors. There is nothing inevitable about this future, especially if we can harness the $225 trillion firepower of capital markets to finance new energy, industrial and transport systems to de-link carbon from prosperity. But capital markets are largely missing in action not only because of mispriced externalities but also because regulators have left investors in the dark with respect to information about corporate carbon emissions.

How can an investor – like the $197 billion Dutch pension PFZW which has pledged to reduce its listed company carbon intensity by 50% by 2020 – decarbonize their portfolio when the majority of large companies in all sectors do not report their carbon emissions? The answer is they have to guess, filling in data gaps with estimates that are often less than reliable. Not only does this impede investor efforts to reduce their carbon risk exposure, but it also disrupts the investor-company feedback loop, which stalls progress on shifting corporate cap-ex and executive pay structures to be aligned with the low carbon future desired by most long-term investors.

Whether carbon emissions or earnings numbers, timely, comparable and reliable data does not grow on trees; it is the result of precise regulatory requirements. This year’s report, Measuring Sustainability Disclosure: Ranking the World’s Stock Exchanges once again underlines this point. Each of the top-10 ranked stock exchanges has one thing in common: they are all located in jurisdictions with mandatory, prescriptive and broad sustainability disclosure policies—what we refer to as “super policies.” The London Stock Exchange is a case in point. In 2012 at the Rio+20 conference at which the first version of this report was launched, the United Kingdom government announced it would be the first country in the world to make it compulsory for listed companies to include emissions data in annual reports. Today, fully 100% of the FTSE 100 disclose their carbon emissions.

Carbon disclosure is not the a-to-z of sustainability data, but it is the better part of the ABC’s. It is the number one sustainability metric judged by clout of investors who want it disclosed ($95 trillion-backed CDP), use it in portfolio wide footprinting ($4.6 trillion-backed backed Montreal Carbon Pledge), or factor it into optimization strategies ($45 billion-backed Portfolio Decarbonization Coalition).

The voluntary mechanisms have served their purpose. There is now broad market awareness around sustainability reporting while voluntary disclosure has flatlined. Regulators must now step in and require mandatory disclosure to close the gap. There is no better place to start than carbon emissions.

Capitalism has proven resilient because of its ability to adapt. This year`s report is a clarion call to stock exchanges and finance ministers around the world to work swiftly with regulators to ensure that investors are no longer denied the information required to decarbonize their portfolios and the planet.

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