Rise in Canadian companies publishing sustainability reports

Sep 09, 2020
But Canada still lags the US, study finds

More than half (58 percent) of companies on the S&P/TSX Composite Index have published a sustainability report this year – a rise of 10 percentage points on last year, according to the latest ESG disclosure study from Millani.

The report authors estimate that by the end of this year, 66 percent of the S&P/TSX Composite will have published a sustainability report, based on which companies historically publish sustainability reports between now and the end of the year.

While that represents an increase on last year, Canadian companies still lag large US companies: 90 percent of issuers in the S&P 500 have published a sustainability report this year, according to separate research from the Governance & Accountability Institute.

‘In a time of increasing capital constraints and pressure to demonstrate resilience in a transitioning economy, the question must be asked whether Canadian companies are missing an opportunity to improve their access to capital,’ the Millani report authors write.

When factoring in the Canadian companies that publish a sustainability report or discuss ESG issues on their website, the number rises to 89 percent. This represents a notable jump compared with the prior three years.

S&P/TSX Composite companies publishing a sustainability report or ESG information on their websites
  Dedicated report ESG information on website Combined
2016 36% 42% 78%
2017 39% 41% 80%
2018 48% 32% 80%
2019 58% 31% 89%

Source: Millani

Millani’s report covers sustainability reports published up to August 31. The term ‘sustainability report’ is used a catch-all bucket for a variety of corporate reports under different names, including sustainability reports, CSR reports, ESG reports, environmental-impact reports and integrated reports.

The report authors note that this year, 25 percent of these reports are dubbed ‘ESG reports’ – double the number from the prior year. At the same time, the number of companies publishing ‘CSR reports’ has decreased.

ESG frameworks

Of the companies that published a report this year, 64 percent use the Global Reporting Initiative (GRI) framework, representing an increase from 59 percent of companies the year before.

Millani’s report authors note a significant increase in the number of companies using the Sustainability Accounting Standards Board (SASB) framework. Last year, 6 percent of reporting companies used SASB standards, while 9 percent mentioned the framework. This year, 36 percent of the reporting companies use the SASB framework while 13 percent mention it.

In December 2019, SASB announced that 120 companies were using its framework and 44 of those companies were not based in the US. That number has continued to climb this year.

SASB and GRI recently announced a collaboration to help issuers identify the ways the two frameworks can complement one another. While the SASB reporting framework was developed with input from the investment community and focuses specifically on financial materiality, the GRI framework was developed with a broader set of stakeholders in mind.

Millani also looked at the number of companies aligning their sustainability reports with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). It finds that 30 percent of companies in the S&P/TSX Composite use the TCFD framework and a further 17 percent mention it – either to acknowledge its value or to commit to using it in the future.

While there continues to be confusion for some issuers about the difference between different ESG reporting frameworks, the Corporate Reporting Dialogue last year found that there are high levels of alignment between the GRI, SASB and CDP frameworks and the TCFD recommendations.

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