Two Examples of Sustainability Disclosures

By: George M. Wilson & Carol A. Stacey

In two prior posts, we began making the case that as we get ready for year-end, it’s time to begin or continue learning about sustainability reporting issues. We also explored how the SASB is beginning to build a set of standards for disclosing sustainability information.


With that as background, our next step is to review a few actual sustainability disclosures made by companies. This will help us build an understanding of why standards in this arena are necessary. In their extensive report, “The State of Disclosure 2016”, the SASB reviewed the latest annual reports on Form 10-K and Form 20-F for the top ten companies in 79 industries. While these were large companies, the sample used was substantial. The executive summary of the SASB report revealed the following findings:


“Overwhelmingly, companies have recognized the existence of, or the potential for, material impacts related to the sustainability topics included in SASB standards. Indeed, 69 percent of companies in the analysis reported on at least three-quarters of the sustainability topics included in their industry standard, and 38 percent provided disclosure on every SASB topic.


In all, 81 percent of entries analyzed, across all sectors and topics, included some form of disclosure; this is a clear indication that companies acknowledge the majority of the sustainability factors identified in SASB standards are currently having—or are reasonably expected to have—material impacts on their business.


The most common form of disclosure—across the majority of industries and topics—was generic boilerplate language, which is inadequate for investment decision-making.
Such vague, non-specific information was used 53 percent of the time when companies addressed a SASB topic.


Companies used metrics—obviously more useful to investment analysis—in less than 24 percent of the cases where disclosure occurred. Importantly, even in these cases the metrics were non-standardized, and therefore lacked comparability from one industry firm to the next.”


Clearly companies are seeing investor demand for sustainability information. Even with no current requirements for such disclosure in place many companies are making sustainability disclosures. Investors are obviously asking for or demanding this information. That said, as the last point above discusses, the lack of formal standards can result in challenges when trying to compare companies in the same industry.


As an example, consider Coca Cola and PepsiCo. Both companies bottle soda and other beverages and hence use substantial amounts of water. Availability of water in these quantities can be an issue in many parts of the world, and obviously water comes with a cost. And these are simple examples of the ESG issues surrounding water. Use of water, not surprisingly then, is an important part of the sustainability disclosures for both Coca Cola and PepsiCo. In the context of ESG disclosures there are clearly financial issues, as more efficient use of water will result in cost savings, as well as environmental and long-term performance issues, based on reducing water use over time, that will be relevant to many investors.


Here are a few excerpts from the water related section of Coca Cola’s sustainability report.



For every drop of water we use, we aim to give one back.

Water quality and availability are key to our business. As we work to establish a more water-sustainable business on a global scale, we have focused water stewardship efforts on the areas where we can have the greatest impact, including improving water-use efficiency and reuse, managing waste water, mitigating water risk and replenishing the water we use in our finished beverages.


Projects implemented by end of 2016 provide a replenish benefit of 221 billion liters per year through community and watershed projects across the globe


Projects helping communities gain sustained access to safe drinking water alone are estimated to have benefited nearly 3 million people as of end of 2016.



In 2004, we were using 2.7 liters of water to make 1 liter of product. At the end of 2016, we were using 1.96 liters of water to make 1 liter of product. And we’re working to potentially reduce it to 1.7 liters of water by 2020.



Meanwhile, here are PepsiCo’s disclosures surrounding water use:

15% improvement in water-use efficiency among our direct agricultural suppliers in high-water-risk sourcing areas

Helped protect and conserve global water supplies, especially in water-stressed areas, and provided access to safe water


We are pleased to report that we met or exceeded all of our water-related goals set for 2015. By year-end, we had reduced our water use per unit of production by 25.8 percent since 2006, exceeding our goal of 20 percent, while saving approximately $80 million in costs over five years.

In 2015, we also continued to pursue integrated watershed management, prioritizing PepsiCo sites in water-stressed or water-scarce areas and supporting growers in our value chain in better managing their water use (see “50 in 5” on page 21). And the PepsiCo Foundation and its partners successfully worked to provide access to safe water for more than 9 million people globally since 2006, significantly exceeding our goal of 6 million by 2015.

Having recently exceeded all of our first‐decade Performance with Purpose water goals, PepsiCo will work to address the world’s largest user of freshwater — agriculture — by working to improve water‐use efficiency among our direct agricultural suppliers by 15 percent, and to deliver an additional 25 percent increase
in water‐use efficiency in our direct manufacturing operations.



As you can see in comparing these two disclosures, it is challenging to assess the relative performance of these two companies in water use issues. For example, it would be helpful t have information about the amount of water each company uses and from where the water is sourced. Both companies tout significant decreases in water use, but only one priovides a financial perspective. In addition both companies present qualitative information, but again assessing relative performance is difficult.


Clearly some form of standards to provide consistent and comparable information would be helpful. And just as clearly, the SASB, in taking on this challenge, has a lot of work ahead of them before investors can meaningful compare this information for companies in the same industry. With the development of their provisional standads the SASB is well into this process to help the market access consistent and comparable information. You can learn more about the provisional standards and the SASB’s process at

As always your thoughts and comments are welcome!

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