Research under the microscope

The need for speed

Investors can't make responsible decisions if companies don't release their sustainability data on time.

Companies may be spending too much time producing glossy reports about their good deeds and not enough time giving investors the information they need to make responsible decisions.

An often-overlooked problem with sustainability reports is that companies are slow to release them. This is partly because regulators do not enforce strict disclosure timelines, and partly because companies spend a lot of time and money producing reports for public consumption.

“Sustainability reports aren't primarily designed for investors, they’re designed for a wider stakeholder group with slightly different needs,” said Michelle de Cordova, director of corporate engagement and public policy at NEI Investments, which is home to Canada’s largest team of in-house socially responsible investment specialists.

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Assuring sustainability reports

A growing number of companies are auditing their sustainability data, but it remains a minority practice.

Since a growing number of economic decisions are being made based in part on sustainability-related information, ensuring the reliability of such data has grown in importance. One way to instill confidence in the underlying quality of sustainability data is to conduct an audit and provide assurance on that information. In the same way that regulated financial data needs to be audited by a qualified assurance provider, sustainability data can be reviewed by a third-party assurance provider.

The past few years have seen a notable rise in the number of companies auditing their sustainability data. This trend is largely a response to increasing pressure from various stakeholder groups for assurance on the reliability of corporate sustainability data. The rules about sustainability auditing are much less stringent than those that govern the auditing of financial data, and, accordingly, the extent and scope of an audit of sustainability data often varies significantly among companies in a given industry. This is because sustainability reporting is still largely a voluntary as opposed to mandatory activity, characterized by a lack of agreed-upon scopes and standards available to assurance providers.

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Asian countries work to balance prosperity

Corporate Knights shows which Asian countries are most successful at balancing economic, social and environmental prosperity.

It’s no surprise that Asia is home to some of the world’s fastest growing economies. On average, the Asian continent experienced a growth rate of 4.5% in 2013, or double the global average of 2.2%. Macau experienced the highest growth rate over the last year at 11.9%, according to the World Bank.

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Sustainable Asia

The introduction and ranking for the Sustainable Asia Scorecard.

A Swiss Re report released earlier this year offered some valuable insights into the sustainability challenges unique to Asia. The insurance giant learned that nine out of 10 cities in the world ranked most vulnerable to natural disaster are located in the Asia region.

Most of the disasters cited were of the kind expected to become more severe and frequent due to climate change – damage and life loss associated with flooding, storm surges and high winds. Flooding rivers alone are expected to affect 380 million people globally, most of them in Asia.

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Global 100 stock performance

Ranking’s sustainability indicators could serve as proxies for market outperformance.

The Global 100 Most Sustainable Corporations ranking, which Corporate Knights has published each year since 2005, is one of the world's most credible and widely followed corporate sustainability rankings.

What distinguishes the Global 100 from many other sustainability rankings is the nature of its methodology. Instead of relying on analyst judgment or rolled up “black box” sustainability scores, the Global 100 is driven exclusively by how companies perform on a set of 12 metrics covering resource, financial and employee management. Coupled with this “data driven” approach, every aspect of the project, including how each metric is calculated, and how the starting universe of about 4,000 stocks is whittled down to 100, is detailed on the Global 100 website.

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