Sustainability Reporting Evolves to Include More Water Risk, Supply Chain Disclosures | BNA

Sustainability Reporting Evolves to Include More Water Risk, Supply Chain Disclosures | BNA

No U.S. Law for Sustainability Reports

The United States has no laws requiring sustainability reporting, although the Securities and Exchange Commission requires companies to disclose climate-related material risks.

Nessing said SEC's February 2010 publication of interpretive guidance on applying climate-related risks to existing disclosure rules has prompted more companies to integrate non-financial information into their annual 10-K reports, which provide an overview of the company's business and financial condition (17 DEN A-1, 1/28/10).

In addition to the SEC guidance, President Obama in October 2009 signed Executive Order 13514 on “Federal Leadership in Environmental, Energy, and Economic Performance.”

The executive order seeks to make sustainability an integrated strategy for federal agencies, and, with some exceptions, requires 95 percent of new federal contracts for products and services to be energy or water efficient, non-ozone depleting, or have non-toxic or less toxic alternatives, among other criteria (191 DEN A-7, 10/6/09).

Investors Driving Reporting

Instead, investor groups such as the Principles for Responsible Investment, the Investor Network on Climate Risk, and the Carbon Disclosure Project are helping to drive increased reporting in the United States.
Investors look to sustainability reports to see how companies are prepared to manage risks, Nessing said. “In the wake of the BP disaster [in the Gulf of Mexico], there was a lot of push on companies to be transparent,” she said.

The KPMG report also found that companies were preparing reports due to investor interest.

“While corporate responsibility reporting was broadly considered an ‘optional' activity only a few years ago, more organizations are generating CR reports to meet rising stakeholder demands for greater accountability, transparency and accuracy in assessing parts of the business that are not necessarily financial, but which contribute to the overall value of the company,” John Hickox, KPMG's Americas leader for climate change and sustainability, said in a statement Nov. 7.