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The Issue: Should proposals calling for sustainability reporting be supported?
Recommendation: Proposals calling for sustainability reporting to shareholders are relatively inexpensive means for improving corporate environmental transparency and should generally be supported.
Increasingly, investors recognize that the long-term financial viability of a company is tied to the economic sustainability of its workers and the communities in which they operates. Some investors have sought to analyze corporate financial, social, and environmental performance, and have called on companies to prepare sustainability reports detailing their firms' records in these areas. Some of these shareholder proposals have requested that companies prepare such reports using the sustainability guidelines issued by the Global Reporting Initiative (GRI).
The GRI Guidelines are intended for all companies, large and small, and focus on disclosure of corporate sustainability performance.
As a practical matter, proposals calling for such disclosure are a no brainer. As sustainability continues to grow as a public policy issue, companies will continue to be pressed to address the issue. Such proposals are non-economic in nature in that they simply call on companies to disclose their sustainability initiatives. Should a company fail to improve its sustainability practices, it does so at its own peril but shareholders should have sufficient information about the company in this regard so as to be able to make well informed investment decisions.
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