The Stewardship of Sustainability

The Minerva Say on Sustainability framework gives pension funds, asset managers and other interested stakeholders accessible reports and data tools to understand how investee companies do (or do not) embed sustainability in their governance systems.

Sustainability – Investor Voice or Exit?

Rather than resorting to divestment or boycott campaigns, giving shareholders a Say on Sustainability enables them to incorporate new themes and concepts into their AGM voting and stewardship activities, just like a Say on Pay.

What do Companies Say on Sustainability?

A surprising amount. Yes, it is true, many companies use a great deal of boiler plate and greenwash to describe their sustainability governance. Promising signs of better integrated reporting are on the horizon, however, despite many positive developments, Minerva’s third annual analysis of the world’s leading sustainability disclosures shows:

• 62% of independent sustainability reports were not up to date with the financial year assessed
• Worrying, 11% of those were two or more years out of date – with six years being the most tardy example
• Only 32% of companies dedicate responsibility for sustainability to a board leader or specific committee
• Just 8% of the US companies analysed were able to meet the quality of reporting achieved by their peers in the UK, EU or Oceania
• Only half of the companies surveyed were linking some form of sustainability metrics to variable pay

Commenting on the publication of the report, Bob Eccles, founding chairman of the Sustainability Accounting Standards Board said: "The Minerva 'Say on Sustainability" is a carefully done and important action-oriented research project. While it notes some modest progress in sustainability disclosures by some of the world's largest companies, it also points out some very specific areas where improvements are needed such as in quality through standardized metrics, timeliness with financial reporting, more explicit linkages between financial and nonfinancial performance, and materiality determination. The latter ultimately rests with the board. Here too the report notes progress but areas where corporate governance needs to be improved. Minerva rightly points out that boards have a fiduciary duty to the company, not only to shareholders. This means they need to identity the significant audiences to the company which is the basis of determining materiality for reporting purposes. I suggest that this be done on an annual basis through a simple one-page board of directors 'Statement of Significant Audiences and Materiality.' This modest suggestion will lead to big improvements in all the key areas this report discusses."

What does the Minerva Say on Sustainability framework look at?

The Minerva Say on Sustainability framework was developed from a wide-ranging review of leading academic papers and 42 legal, regulatory and independent sustainability disclosure initiatives.  The six areas of focus in the framework look at:

Disclosure & Transparency What and where are companies disclosing information?Is there risk recognition, socio-environmental performance data or target-setting? Is the data timely? Management Processes Who owns sustainability in the firm, who is responsible, how senior?
Are management systems disclosed &/or certified? Risk Management Policies, performance, targets, linkage to executive pay Stakeholder Relations Suppliers, value perception, staff rewards, charity, political donations Audit & Verification Assessment standards used, external verification Public Participation Recognition of initiatives including CDP, UN Global Compact, GRI, SASB etc.

Embedding Sustainability Governance

We are very excited to announce that in 2016 the Minerva Say on Sustainability reports and data will be:

• Published through the Bloomberg ESG platform
• Incorporated in the Association of Member Nominated Trustees Red Lines Voting initiative
• Incorporated into extended, custom voting guidelines for asset managers and pension funds
• Extended to include GHG disclosures and targets to monitor progression and integration with pay and reward
• Made available as a time-series CSV data set for incorporation in custom models. Say on Sustainability is fully integrated with Minerva’s global governance, director pay and  biographical data, AGM vote results and key performance/risk indicator relational data sets.

To request a copy of the report please contact: hello@minerva.info