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    Companies That ‘Walk the Talk’ on Sustainability Have a Positive Outcome in Their Financial Performance

    Companies That 'Walk the Talk' on Sustainability Have a Positive Outcome in Their Financial Performance

    As companies position themselves as good corporate citizens, Sustainability Reporting becomes increasingly important.  Non-financial Sustainability Reports are one of the most useful and powerful tools a company can wield.

    The Centre for Sustainability and Excellence’s annual research, 2017 Sustainability Reporting Trends in North America, looked at 551 unique reports covering sectors, size, ownership, standards and guidelines used, external assurance practices, carbon footprint goals and financial performance.

    We found that almost two thirds of companies with the highest CSR rankings achieved better financial results than companies with lower rankings.  We gathered data from CSRHub, a global sustainability ratings agency, the Global Reporting Initiative (GRI) platform, publicly available financial and annual reports and the Nasdaq platform.

    CSE’s findings are consistent with other research which indicates that sustainability reporting and comprehensive sustainability strategies are good for businesses: EY – improved reputation; McKinsey – short- and long-term value; the Conference Board – increased disclosure; Ethical Corporation – communications case studies.

    What makes CSE research stand out is the correlation of sustainability reporting, sustainability ranking and profitability.  The findings are clear.  Companies which pay attention to the many factors related to sustainability and make the effort to report these findings, have a positive outcome in their financial performance.

    Stakeholders are asking companies to be transparent beyond financial performance. Companies who wish to communicate their actions and efforts towards sustainable development, purposefully put themselves in positions where transparency is imperative.  They must “walk the talk” and demonstrate results. It is worth mentioning that the sectors with the highest reporting presence are Energy and Energy Utilities, Financial Services, Food & Beverage, and Mining, while as noted in CSE’s 2016 research on Silicon Valley, tech firms and other sectors are surprisingly under-represented.

    Additionally, the adoption of the UN Sustainability Development Goals (SDGs) has proceeded slowly in North America. However, 41% of businesses are expected to embed SDGs into their strategy and business practices within five years, and 71% of businesses say they are already planning how they will incorporate the SDGs.

    CSE’s global research and experience indicate that important factors to successful Sustainability Reporting include training executives and employees, to align skills with mission, compliance with Comprehensive Standards for Reporting such as GRI and actively seeking external verification and assurance.  Although North American companies have not attained the most prominent role in Sustainable Reporting, as soon as value creation is realized, reporting will become a necessity and key part of business excellence.