WASHINGTON, March 5, 2021 /PRNewswire/ — Results of a new analytic survey published by Global ESG Monitor (GEM) showed that U.S. companies in the Dow Jones Industrial Average (DJIA) generally had miserable scores in reporting their non-financial progress on Environmental, Social and Governance (ESG) goals. Nineteen of the 30 Dow companies fell in the bottom 50% of the 140 companies analyzed worldwide.
Most American companies failed to match the top scores of international firms listed on leading indices in the U.S., Germany, Europe and Australia. At the bottom of the Dow field was Microsoft’s (MSFT) independent sustainability report, which scored just 3 points based on quality-evaluation criteria such as transparency, comparability, and reliability. Four U.S. companies in the bottom five rankings including: McDonald’s (MCD) and JP Morgan Chase (JPM), with Honeywell (HON) and Microsoft tied for dead last.
«If these were high school scale grades, only Walgreens would have passed for their stand-alone ESG report,» said David Fuscus, President of Xenophon Strategies, a Global ESG Monitor partner. «Twenty-three Dow companies would get an F, with scores so low that they might be held back a grade.»
Walgreens (WBA) was the highest-ranking Dow company with a GEM Rating of 45 out of 66 points for stand-alone ESG reports followed by Intel (INTL) with a score of 42.
«We don’t know what these companies are doing on sustainability because they have dismal reporting transparency,» said Michael Diegelmann, CEO of German investor relations and ESG consultancy cometis and GEM partner. «Data shows companies that prioritize non-financial ESG goals can outperform their peers financially. Too often the basic details that public corporations choose to report and how and where they report it is left out of official ESG documents that investors use. The lack of comparability makes it nearly impossible for stakeholders to accurately judge what’s happening.»
The Global ESG Monitor looked exclusively at publicly reported data of 140 companies which are listed on leading indices including the DAX (Germany), EURO STOXX 50 (Europe), Dow Jones Industrial Average (USA), and S&P/ASX-50 (Australia). Information came from 85 annual reports that integrated ESG data, as well as 100 stand-alone independent sustainability reports published by the companies.
Ariane Hofstetter, CEO of research institute KOHORTEN which led the analysis and designed the study, said: «By measuring and comparing sustainability reporting, we want to ensure more transparency. Only through transparency can global sustainability goals be achieved. It’s important that the data shows European-indexed companies performing better. Is this a coincidence or the result of regulation and political will?»
GEM’s research analysts are specialized in capital market reporting and used multiple research techniques as part of GEM ASSAY™, a proprietary analysis method which includes data and quality-evaluation criteria that analyzes comprehensibility, transparency, measurability, comparability, timeliness, adequacy, and reliability. GEM ASSAY™ consists of 53 general and 490 industry-specific criteria, the latter of which were defined working with the «accounting metrics» of the Sustainability Accounting Standards Board (SASB). Other frameworks, like the Global Reporting Initiative (GRI) and the UN Sustainable Development Goals (SDGs), also informed the study criteria.
Among the key findings globally, only 27% provide any methodology and only 19% provide formulas, approaches or calculation methods on how ESG data was gathered. The study also reveals that only 35% of the reports demonstrated transparency when it came to unmet ESG objectives.
About the Global ESG Monitor
The Global ESG Monitor (GEM) assesses the ESG (environmental, social and governance) transparency of companies around the globe. GEM is founded on the belief that ESG transparency is key to solving sustainability problems and building trust.
For this study, publicly disclosed ESG information from 140 companies were analyzed. The GEM scores and ranks based on the quality of separate (S-NFR) or integrated (I-NFR) non-financial reporting. The GEM is an international partnership between cometis and KOHORTEN (Germany), Currie (Australia) and Xenophon Strategies (USA).
Reports/rankings are publicly available at www.GlobalESGMonitor.com.
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SOURCE Global ESG Monitor