Investors Still Don't Get Accountability

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Of course, some investors do recognize that ESG risks exist. When asked to identify priorities, they cited energy efficiency, protection of labor standards, health and safety, and human rights. Some 70% of the investment firms we surveyed are members of the Carbon Disclosure Project, which means they acknowledge the relationship between shareholder value and climate change and have made commitments with respect to their performance and activities. In addition, 52% are signatory to the UN Principles for Responsible Investment and 42% to the UN Environment Program Finance Initiative.

Yet there was not high awareness among mainstream investors about the extent of their organizations' adherence to or implementation of these principles. And more worrying, respondents had no awareness of the extent to which companies with strong performance on sustainability indices might be considered superior investments on the grounds their results demonstrate to investors that they have met their commitments.

Stakeholders Have Differing Views

For companies such as TNT, which is a Dow Jones Sustainability Index "Super Sector Leader," this makes interesting reading. "These findings cause us to take a long hard look at how we communicate our sustainability initiatives, especially the hard work we have done to achieve emissions accounting and reporting alongside our financial accounting," said Chief Executive Peter Bakker after he learned of the findings. "We communicate these in terms of business risk mitigation, not just saving the planet, even though the two are becoming the same. We will continue applying our logistics skills to humanitarian initiatives, as food security and disaster response are the right things for us as a global corporate citizen to address."

Curiously enough, the views of shareholders and investors contrast sharply with those of other stakeholders such as employees, customers, and suppliers. Survey work we've done in recent years for the logistics and transportation industry found specific issues such as health and safety, labor standards, and carbon emissions as the burning issues for reporting and accountability. Indeed, each stakeholder group tends to perceive dangers and accountability differently. Risk, like beauty, still lies in the eyes of the beholder.

Alyson Warhurst is chair of Strategy and International Development at Britain's Warwick Business School, a fellow of the World Economic Forum, and a founding director of social enterprise and advisory firm Maplecroft. She has advised De Beers and international humanitarian and human rights organizations, among others, on corporate social responsibility.