The State of Corporate Sustainability Disclosure-2023

Abstract

In this report, we examine sustainability reporting among S&P 500 firms, leveraging data from the UCLA Open for Good initiative. We assess 16 sustainability metrics within Environmental, Social, and Governance (ESG) dimensions, finding an overall low disclosure rate of 55%. Environmental metrics, such as greenhouse gas emissions and climate strategy, show the lowest average rate at 52%. In contrast, Social metrics, focusing on workforce diversity, have a higher average of 58%, with Governance metrics at 55%. While our analysis reveals robust reporting for Scope 1 and 2 GHG emissions, exceeding 80%, we find a significant decrease for Scope 3 emissions at 56%. With new California legislation mandating carbon emissions and climate risk disclosures, these low disclosure rates indicate a challenging path ahead for corporations operating in California. Our findings on workplace and board diversity also suggest limited public reporting despite regular data collection for federal mandates. On average, women constitute only 39% of employees in S&P 500 firms, with their representation at the board of directors' level being even lower, at an average of 32%. Additionally, we highlight that the average CEO compensation is 305 times greater than that of the median employee, and advocate for broader C-suite disclosure for more accurate yearly comparisons. Overall, our analysis emphasizes the urgent need for better ESG disclosure to meet sustainability challenges.

Keywords: Corporate Disclosure, Sustainability Metrics, ESG, Climate Change, Diversity, CEO compensation

JEL Classification: M14, Q, Q4, Q54, Q24, Q25