JUST Report

With Investor Pressure and SEC Requirements Accelerating, Corporate America Needs to Step Up on Environment Disclosure

The urgency of the climate crisis, and corporate America’s role in addressing it, has become increasingly clear. The latest findings from the IPCC show that the promise of the Paris Agreement – limiting global temperature increase to 1.5°C – is falling further out of reach. At the same time, investors, regulators, and other stakeholders are asking for companies to show how they’re taking action.

Climate-related proposals make up a majority of the record number of ESG shareholder resolutions this proxy season. Last month, the U.S. Securities and Exchange Commission (SEC) also moved ahead with a proposed rule to mandate climate-related disclosures in annual reporting from publicly listed companies. The SEC’s proposal includes a requirement to report Scope 1 (direct) and 2 (indirect) emissions, as well Scope 3 emissions (those occurring through a company’s supply chain activities), based on their materiality per company.

Recent polling from JUST and our partners at SSRS, conducted with Ceres and Public Citizen, found that 86% of Americans, including majorities of both Democrats and Republicans, support federal requirements for climate disclosures. Yet, JUST analysis also found nearly half of Russell 1000 companies have yet to disclose their Scope 1 and 2 emissions. What Americans, investors, and others are looking for goes beyond emissions disclosures, and includes plans on how to reduce emissions.

In light of these pressures, we examined what environment data major U.S. companies are disclosing in a new report, The Current State of Environment Disclosure in Corporate America: Assessing What Data Russell 1000 Companies Publicly Share. Our analysis found that overall, disclosure is low with over a third of companies sharing no data on the selected data points. Read on for more key findings and download the full report below.

Disclosure is low overall

The Current State of Environment Disclosure in Corporate America analyzes 13 environment data points we use to evaluate America’s Most JUST Companies, which reflect the issues most important to the American public. These 13 data points are mainly performance-related (69%), highlighting numerical data that reflect the actions of a company. A few are policy-related (31%), reflecting the existence of a policy or commitment by a company. Overall, disclosure is low. Among Russell 1000 companies, 35% do not disclose any of these selected data points, and only one company – Microsoft, a top performer in our Rankings – discloses all 13. On average, a Russell 1000 company disclosed 3.1 data points.

Disclosure rates vary by metric history

Disclosure rates per data point vary from 7% to 57%, even on metrics with a long history of disclosure in environment, social, and governance (ESG) measurement. However, those data points with a long history, including water intake and waste recycling, did tend to have higher disclosure rates. Drilling down, we see the highest disclosure rate is for Scope 1 Plus 2 CO2 Emissions – a main component of the SEC’s proposed climate disclosure rule. Our analysis found that 57% of the Russell 1000 disclose this data. Further, 43% of Russell 1000 companies disclose an emissions reduction commitment of some kind, another metric that the SEC is seeking to track.

Larger companies disclose at least three times more data

To further understand the potential drivers of disclosure, we looked at the size of companies and their associated disclosure rates. With respect to workforce size and market capitalization, larger companies disclose three to five times as much data as smaller companies. Larger companies typically have more resources to track their data and disclose findings and commitments, and are also more likely to face pressure from shareholders to do so.

As part of this analysis, we took an in-depth look at which industries are leading and lagging on disclosures, how members of the Business Roundtable perform compared to the rest of the Russell 1000, and case studies on companies leading the pack in environmental disclosures. You can explore these more detailed findings here.

Through our survey research, we have found that there is nearly universal agreement (nine in 10 agree) that the activities and behaviors of America’s largest companies impact society as a whole. Additionally, 85% of Americans agree that companies need to disclose more about their business practices and impact on society. The findings in this new analysis paint a clear picture of disclosure when it comes to environmental issues – issues that impact all stakeholders – showing that much more is needed. As disclosure on these issues likely becomes increasingly standardized, JUST will continue to track how corporate America responds and disclosure (hopefully) improves over time.

Click below to read the full report:

The Current State of Environment Disclosure in Corporate America: Assessing What Data Russell 1000 Companies Publicly Share is the first in a series of analyses from JUST Capital’s on the state corporate disclosure by Stakeholder. There are many uses for this dataset on environment data disclosure and our planned future analyses. If you’re an investor, policymaker, worker, or other stakeholder with further questions or interest, please feel free to get in touch.

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