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  • Daniel Goelzer

Sustainability Reporting: (Almost) Everybody Does It

On November 16, the Governance & Accountability Institute (G&A) released 2021 Sustainability Reporting in Focus, its annual report on sustainability reporting trends among companies in the S&P 500 and Russell 1000 indices. According to the press release accompanying the report, key findings include:

  • 92 percent of the S&P 500 published a sustainability report in 2020, up from 90 percent in 2019.

  • 70 percent of Russell 1000 companies published a sustainability report in 2020, up from 65 percent in 2019.

  • 49 percent of the smallest half by market cap of Russell 1000 companies published a sustainability report in 2020, up from 39 percent in 2019.

G&A’s concludes that sustainability reporting “has clearly become a best practice among the largest U.S. public companies.” (The 2021 report focuses on the 2020 publication year, so it is possible that sustainability reporting rates this year are even higher, given the attention climate change and other ESG issues have received in the past 12 months.)


G&A began researching the sustainability reporting of the S&P 500 in 2012 (publication year 2011). Since that time, sustainability reporting has gone from relatively rare to almost universal; G&A’s initial report found that just 20 percent of S&P 500 companies published sustainability reports or disclosures in 2011. Previously, G&A has published separate reports on the S&P 500 and the Russell 1000. See G&A Finds That Ninety Percent of the S&P 500 Publish a Sustainability Report, July-August 2020 Update and With Sustainability Reporting on the March, Protiviti Has Ten Questions Directors Should Ask, October-November 2020 Update (which discusses G&A’s 2020 report on the Russell 1000). This year, G&A transitioned to one annual publication.


G&A’s findings with respect to three key topics – industry breakdown of reporters and non-reporters, use of disclosure frameworks, and external assurance on sustainability reporting -- are summarized below.

  • Industry sectors and sustainability reporting. The Russell 1000 industry sectors with the highest percentage of companies that issued sustainability reports in 2020 were Utilities and Energy; all 38 of the companies in Utilities issued such reports, as did 94 percent of those in in Energy (34 reporting out of 36 in the sector). The industry sector with the lowest percentage of companies issuing reports was Communication (23 non-reporters/51 percent of the 45 companies in the sector). Communications was also in last place in 2019 and is the only sector in which a majority of companies do not issue a sustainability report. Second-from-the-bottom was Information Technology (83 non-reporters/45 percent of the 183-company sector). Health Care was third lowest with 44 percent of companies not reporting.

  • Use of ESG disclosure frameworks. G&A analyzed whether companies that published a sustainability report used one of the recognized disclosure frameworks, such as the Global Reporting Initiative’s (GRI) disclosure framework, the Sustainability Accounting Standards Board’s (SASB) disclosure standards, or the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). G&A also tracked disclosure through responses to the CDP Climate Change Questionnaire and disclosure of company alignment with the UN’s Sustainable Development Goals (SDGs). It found that 52 percent of reporting companies used the GRI standards; 39 percent aligned with the SASB standards; 17 percent followed the TCFD recommendations; 42 percent presented alignment with specific UN SDGs; and 40 percent of the Russell 1000 responded to the CDP questionnaire. (Many companies utilize more than one framework or disclosure vehicle.) Among other things, G&A’s findings indicate significant increases in both GRI and SASB reporting, compared to 2019.

  • External assurance on sustainability reporting. A growing number of companies obtain external assurance from an auditor or other professional on their ESG disclosures. In 2020, 35 percent of Russell 1000 reporters obtained external assurance on their non-financial ESG disclosures, compared to 24 percent in 2019. Eighteen percent of companies in the smallest half of the Russell 1000 obtained such assurance, up from 12 percent in 2019. Forty-four percent of the companies in the largest half obtained assurance, compared to 29 percent in 2019. G&A states that “assurance provides increased recognition, transparency, and credibility * * * while reducing risk. Seeking external assurance often indicates strong internal reporting and management systems. Overall, assurance improves stakeholder communication and trust.”

Comment: As stated in prior Updates, given the increasing investor and regulatory emphasis on ESG disclosure, it seems inevitable that these issues will become an important aspect of the audit committee’s work. Audit committees that are not already doing so should focus on what ESG disclosures their company makes, how the information is collected, and how the disclosures impact financial reporting. As investors rely more heavily on ESG disclosures in their decision-making, the reputational and liability risks associated with inaccurate disclosure increase. To address these risks, audit committees should explore with management the nature of the controls and procedures to which sustainability disclosures are subject. These controls should be as rigorous as those applicable to traditional financial reporting. Obtaining third-party assurance over sustainability disclosures should also be considered.

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