Sasb Industry Standards: A Field Guide

SASB INDUSTRY STANDARDS
A field guide
CONTENTS
SASB is committed to bringing

2 Foreword
3 The purpose of this guide
consistency and transparency 4 About SASB
to how sustainability performance 5 SASB governance

6 The SASB Board
is disclosed, providing standards 7 The SASB Staff
that enable measurable, 8 The evolution of reporting
comparable, and decision-useful 9 How we develop our standards

10 Standards-development
environmental, social, and process: Producing
market-informed outcomes
governance (ESG) information for 11 Release of provisional standards
– and the path forward
investors to assess risk and make 12 Analyzing materiality
more informed investment choices. 14 Importance of an

industry approach
16 79 industries from A–Z
306 Industry profile features
THE CURRENT STATE

OF SUSTAINABILITY
Over 40% of all
disclosures on sustainability topics
Only 15% of
disclosures on sustainability topics
DISCLOSURES contain BOILERPLATE language. use METRICS.
Today’s investors understand that sustainability THE PURPOSE OF THIS GUIDE
issues can impact a company’s current financial
position and prospects for long-term growth.
While investors are interested in having access to comparable, reliable, The Field Guide represents an easy-to-use
and useful sustainability information, that need is not matched by the system for understanding and managing an
availability and quality of such information. This is the need that SASB
industry’s risk exposure as seen through the
was created to fill.
lens of sustainability.
SASB standards surface the sustainability topics that are reasonably
likely to materially impact the financial condition or operating perfor-
mance of companies for each of the 79 industries. The standards enable Written for investors and companies, the guide provides a high-level
companies to disclose comparable information, so that both investors overview of the key characteristics of an industry, while also
and companies can benchmark performance on the issues that matter. addressing what related sustainability challenges it faces compared
to other industries. Helping readers easily and quickly understand
SASB’s Field Guide serves as a starting point for understanding the the s ustainability-related risks and opportunities of each of the 79
breadth of sustainability issues encompassed in SASB’s 79 industry industries, the guide identifies specific SASB topics and metrics
standards and the unique sustainability profile of each industry. As per industry and how they are linked to value and carry a financial
seen in the industry views within the guide, sustainability topics are impact. It also summarizes the industry’s current state of sustain-
connected to distinct financial drivers that result in financial impacts, ability disclosure’s strength or weaknesses, among other data points.
which in turn have the potential to affect financial valuation. Corporate
leaders and investors can thus use the guide to scan SASB disclosure Using this guide, readers will get a better sense of the exposure to
topics and understand how they may impact valuation so they make risk in each industry, as well as in which industries that risk is likely
more informed investment choices. to be uncompensated due to inadequate disclosure in mandatory
SEC filings.
SASB exists to improve the quality and effectiveness of sustainability
disclosure. We hope you’ll find this guide to be a useful resource in
understanding and measuring how sustainability factors affect cor-
porate performance at the industry level. More broadly, we hope that
improving sustainability disclosure will help investors allocate their
capital in more informed ways, which will strengthen our financial mar-
kets for decades to come.
Mary Schapiro
Former Chair, Securities and
Exchange Commission (SEC)
SASB, Vice Chair of the Board
2 3
ABOUT SASB SASB GOVERNANCE
Established in 2011, the Sustainability The SASB, its standards-setting activities,

Accounting Standards Board (SASB) is the and its oversight and support bodies are
independent standards-setting organization designed to facilitate due process in standards
for sustainability accounting standards. development.
The mission of the SASB is to maintain sustainability accounting The role of the SASB is to establish and improve standards through
standards that help public corporations disclose material, decision- a variety of responsibilities, including the review and approval
useful information to investors in SEC filings. That mission is of Technical Agendas and updates proposed by the SASB staff;
accomplished through a rigorous process that includes evidence-based oversight of due process in staff activities to ensure adherence to
research and broad, balanced stakeholder participation. The SASB, key principles (as outlined in the SASB Conceptual Framework) and
through its Foundation, also provides education and resources that practices (as detailed in the SASB Rules of Procedure); initiation of
advance the use of the standards. public comment periods for proposed updates; ratification of the
standards and updates; approval and issuance of interpretations of
The SASB Foundation, an independent 501(c)3 non-profit, is responsible the standards; and appointment of Advisory Committees or Groups
for the funding and oversight of SASB. The SASB Foundation appoints to inform standards-setting.
members of the SASB, a standards board that is responsible for setting
the standards, maintaining technical agendas, and proposing updates to The SASB staff supports the SASB by carrying out research, technical
the standards. The staff of the SASB is responsible for executing research analysis, stakeholder consultation, and additional projects to inform
and engaging in consultation on the standards. the standards-setting process.
This composition is intended to facilitate adherence to “best

practices” in the SASB’s standards-setting activities to ensure that
the process results in cost-effective standards that yield material,
decision-useful information.
PARTICIPANTS IN 2,800+ individuals $23.4T

representing assets under management
$11T
SASB INDUSTRY
WORKING GROUPS
and market capital
4 5
THE SASB BOARD THE SASB STAFF
JEAN ROGERS, PHD, PE KURT KUEHN DAVID POST, CFA

CHAIR OF THE SASB
Former CFO, UPS Director of Research
STANDARDS BOARD
Transportation Sector Chair
Founder and Former CEO, SASB
Infrastructure Sector Chair LLOYD KURTZ, CFA
SECTOR ANALYSTS
Senior Portfolio Manager, Head
JEFFREY HALES, PHD
VICE CHAIR OF THE SASB
of Social Impact Investing, Wells
ERIC KANE SONYA HETRICK
STANDARDS BOARD Fargo Private Bank
Sector Analyst Sector Analyst
Professor, Georgia Institute of Health Care Sector Chair
Technology, Ernest Scheller Jr. Resource Transformation ANTON GORODNIUK, CFA LYNN XIA
College of Business Sector Chair Sector Analyst Sector Analyst
Financials Sector Chair
ELIZABETH SEEGER
QUINN UNDERRINER HENRIK COTRAN
VERITY CHEGAR Director, KKR
Sector Analyst Sector Analyst
Vice President and ESG Consumer Goods ( formerly
Strategist, BlackRock Consumption II) Sector Chair
DAVID PARHAM BRYAN ESTERLY, CFA
Extractives & Minerals Processing Sector Analyst Sector Analyst
STEPHANIE TANG, JD
( formerly Non-Renewable
Resources) Sector Chair Senior Corporate Counsel and
Assistant Corporate Secretary, NASHAT MOIN
DANIEL L. GOELZER, JD the Clorox Company Sector Analyst
Senior Counsel, Baker & Renewable Resources &
McKenzie LLP Alternative Energy Sector Chair
Services Sector Chair Food & Beverage ( formerly
Consumption I) Sector Chair
ROBERT B. HIRTH, JR.
Chairman, Committee of
Sponsoring Organizations of the
Treadway Commission (COSO),
Senior Managing Director,
Protiviti
Technology & Communications
Sector Chair
6 7
THE EVOLUTION OF REPORTING HOW WE DEVELOP
OUR STANDARDS
SASB’s creation and mission represent a natural SASB’s standards-development process is

evolution in the history of corporate reporting. evidence-based, draws on insights from a broad
spectrum of stakeholders, and is designed to
reflect industry-specific sustainability impacts.
Congress established the U.S. Securities and Exchange Commission SASB considers the following set of principles when identifying
in the 1930s to require and oversee corporate disclosure. sustainability topics that warrant an industry standard. Each potential
topic is evaluated against these principles before being proposed for
Forty years later, in 1973, the Financial Accounting Standards Board inclusion in an industry standard, helping to focus the standards on
(FASB) was created. FASB establishes standards for accounting only the most critical sustainability topics:
information that is decision-useful for investors and other users of
financial statements. • Potential to affect value creation. Using research and stakeholder
input, SASB identifies topics that can or do affect operational
In 2012, SASB was established to provide high-quality disclosure results and financial conditions through three channels of impact:
of material sustainability factors. Sustainability accounting stan- (1) revenues and costs, (2) assets and liabilities, and (3) cost
dards are intended to complement financial accounting standards, of capital.
allowing for side-by-side evaluation of financial fundamentals and • Of interest to investors. SASB develops standards for sustainability
sustainability fundamentals to provide a more complete view of a topics that are reasonably likely to constitute material information.
corporation’s performance. Topics are selected with regard to investor interest, as well as their
ability to affect the financial condition or operating performance
of a company.
• Relevant across an industry. We address topics that are systemic
and/or represent unique risks and opportunities to an industry and,
therefore, are likely to apply to many companies within that industry.
• Actionable by companies. SASB assesses whether broad sustain-
ability trends can be translated into industry-specific topics that
10 79
individual companies can control or influence.
• Reflective of stakeholder consensus. We consider whether issuers
STANDARDS
for sectors and industries and investors concur that each disclosure topic is reasonably likely to
DEVELOPMENT
constitute material information for most companies in an industry.
8 9
STANDARDS-DEVELOPMENT RELEASE OF PROVISIONAL
PROCESS: PRODUCING STANDARDS – AND THE
MARKET-INFORMED OUTCOMES PATH FORWARD
SASB’s standard-setting process is evidence-based, In March 2016, SASB released the provisional
market-informed, and validated through research standards for 79 industries, marking the end
and quantitative analysis. of a 44-month provisional phase.
The SASB standards are intended for voluntary use by public compa- This also marked the beginning of the next phase of standards develop-
nies in making disclosures that are required by existing U.S. regulation, ment and a new objective: to codify the standards and maintain them
including those in Forms 10-K and 20-F. SASB takes a rigorous moving forward. Codification entails a systematic review of the provi-
approach to its s tandards-setting activities to ensure that its standards sional standards and further research and stakeholder consultation to
identify industry-specific sustainability factors that are likely to have recommend updates to the standards. Codification involves:
material impacts, while also providing disclosure guidance that is • Research
cost-effective for issuers and decision-useful for investors. • Consultation with Issuers and Investors
• Agenda Setting
In October 2012, SASB publicly launched its provisional standards • Updates & Public Comment Period
development phase, which resulted in provisional standards for • Ratification of Updates
79 industries in 10 major sectors. The SASB Conceptual Framework
Refer to SASB’s Conceptual Framework and Rules of Procedure for
guided this work through a precise explanation of our principles
more detail on the principles and procedures for standards setting.
and standard-setting process. This process involved evidence-based
research, technical development, vetting by balanced multi-stakeholder Stakeholder-specific feedback on likely materiality of all proposed disclosure topics
working groups, and public comment. SASB’s independent Standards (% of respondents, by interest group, who think suggested topics are likely to constitute material information)
Council oversaw due process with respect to standards development. Health Care
Financials
Technology & Communications
Non-Renewable Resources
Transportation
Services
Resource Transformation
Consumption I
Over 85% of investors and issuers (on average) agreed on Consumption II
the likely materiality of SASB’s sustainability disclosure

Renewable Resources & Alt. Energy
Infrastructure
topics (see graphic, opposite page).
0 10 20 30 40 50 60 70 80 90 100
All % Corporations % Investors/Analysts %
10 11
ANALYZING MATERIALITY
SASB is committed to identifying standards for material EVIDENCE OF FINANCIAL IMPACT

SASB looks at three primary drivers of financial impact: revenues and
sustainability factors that are likely to have an impact
costs, assets and liabilities, and cost of capital. These drivers are further
on the financial condition or operating performance segmented into specific types of financial impacts that mirror the way
of companies in a given industry, and therefore warrant mainstream analysts and investors value corporations, and that there-
disclosure in mandatory filings with the SEC. fore can more easily feed into a range of financial analysis tools and
calculations. These impact types include:
To pursue this objective, SASB employs a rigorous, evidence-based Revenue Assets
process, with the U.S. Supreme Court’s definition of materiality as • Market size • Tangible assets
its basis.1 While the determination of materiality is the company’s • Pricing power • Intangible assets
responsibility by law, SASB standards help companies disclose this
information in a decision-useful manner that allows investors to com- Liabilities
Costs
pare performance and companies to benchmark. • Contingent liabilities
• Recurring costs
and provisions
–Cost
– of goods sold (COGS)
Consistent with TSC Industries v. Northway,2 SASB identifies topics • Pension and other liabilities
–Research
– and development
that would be of interest to the reasonable investor in the total mix of (R&D)
information available to them. Consistent with Item 303 of Regulation Cost of capital
• Extraordinary expenses
S-K, SASB evaluates known trends and uncertainties that are rea- • Risk profile
• Capital expenditures (CAPEX)
sonably likely to have a material effect on the financial condition or • Industry divestment risk
operating performance of a company. Finally, consistent with Basic v. Sustainability issues can change availability and pricing of raw
Levinson,3 SASB assesses the magnitude of the likely financial impact materials and inputs, which affect expenses throughout the supply
by evaluating the impact that performance on the sustainability factor chain through the cost of goods sold. Issues, such as climate change,
could have on a company’s valuation via looking at the top and bottom can impair tangible and intangible assets, such as plant, property, and
decile of sustainability performance. For example, SASB analysts use equipment (PP&E) or brand value, respectively. Realized or contingent
Discounted Cash Flow (DCF) models to evaluate the impact of sus- liabilities can arise from sustainability issues, whether these entail
tainability performance on financial drivers. Every topic in the SASB severe weather-related events or climate-related regulatory action.
standards has a demonstrated link to financial performance. This guide Finally, sustainability issues can affect a firm’s cost of capital by raising
summarizes those links for each topic, and more detail can be found in its risk profile or limiting its access to capital.
SASB’s Navigator (https://navigator.sasb.org/).
SASB standards are the only sustainability standards

developed in accordance with the definition of
According to the U.S. Supreme Court, information is material if there is “a substantial likelihood
materiality established under U.S. securities laws.
1
that the disclosure of the omitted fact would have been viewed by the reasonable investor as having
significantly altered the ‘total mix’ of information made available.”
2 TSC Industries v. Northway, 426 U.S. 438, 449 (1976)
3 Basic Inc. v. Levinson, 485 U.S. 224 (1988)
12 13
IMPORTANCE OF AN
INDUSTRY APPROACH
Analyzing the materiality of sustainability information

requires an understanding of the specific impact
of business on society and the environment, as well
as the impact of sustainability challenges on business.
Companies operating in a specific industry are more likely than To address this issue, SASB developed the Sustainable Industry
companies in disparate industries to have similar business models and Classification SystemTM (SICSTM). Building upon traditional classifica-
use resources in similar ways, and therefore are likely to have similar tion systems (e.g., SIC, GICS, and BICS), SICS categorizes sectors and
sustainability risks and opportunities. industries in accordance with a fundamental view of their business
models, their resource intensity and sustainability impacts, and their
SASB develops sustainability accounting standards at the industry potential for sustainability innovation. You can view a company’s SICS
level, focusing on issues closely tied to resource use, business models, classification by visiting http://www.sasb.org/sics/ and inputting the
and other factors at play in an industry. This makes it easier for finan- company’s ticker symbol.
cial analysts – who already evaluate corporate performance within an
industry context – to integrate and assess material sustainability factors
alongside financial fundamentals.
Traditional industry classification systems present a challenge to

SASB’s industry focus because these systems do not always group
industries with common sustainability characteristics. These systems
also establish hierarchies and layers of industries based on revenue
and other economic, variables, providing less visibility–and access to
capital–for industries with greater sustainability risks or opportunities
but smaller economic footprints.
GLOBAL
INSTITUTION
89% will REQUEST
sustainability information directly from
67% are more
likely to consider ESG information
50% are very
likely to SPONSOR OR CO-SPONSOR
INVESTORS the company if COMMON STANDARDS were used a shareholder proposal
14 15
Although the universe of sustainability
79
issues served as a starting point for SASB’s
standard-setting process, environmental, social,
and governance issues have a different financial
INDUSTRIES impact or consequence, depending on the

context in which they arise. Sustainability impacts
FROM A–Z vary from one industry to another, giving each

industry its own unique sustainability profile. In
the next section, SASB topics are presented with
associated links to value drivers on an industry-
by-industry basis.
For more information on the

profiles, see “Industry Profile
Features” on page 306.
16 17
MATERIALITY MAP
Exposure to ESG factors
Likely has material impact

SASB’s Materiality Map indicates expo- For more information, please see Business
Likely does not have material impact Envi- Social Human model & Leadership &
sure to material environmental, social, or http://www.sasb.org/materiality/ Page ronment capital capital innovation governance
governance factors for each industry. The sasb-materiality-map/ Hardware 147
map was developed by assessing evidence Health Care Delivery 150
of investor interest and evidence of Health Care Distributors 155
financial impact.
Home Builders 158
Hotels & Lodging 163
Household & Personal Products 166
Industrial Machinery & Goods 169
Likely has material impact Business
Insurance 172
Likely does not have material impact Envi- Social Human model & Leadership &
Page ronment capital capital innovation governance Internet Media & Services 175
Advertising & Marketing 20 Investment Banking & Brokerage 178
Aerospace & Defense 22 Iron & Steel Producers 182
Agricultural Products 26 Leisure Facilities 186
Air Freight & Logistics 33 Managed Care 189
Airlines 36 Marine Transportation 193
Alcoholic Beverages 39 Meat, Poultry & Dairy 197
Apparel, Accessories & Footwear 43 Media Production & Distribution 202
Appliance Manufacturing 46 Medical Equipment & Supplies 205
Asset Management & Custody Activities 48 Metals & Mining 209
Auto Parts 52 Mortgage Finance 215
Automobiles 55 Multiline and Specialty Retailers & Distributors 218
Biofuels 58 Non-Alcoholic Beverages 221
Biotechnology 62 Oil & Gas Exploration & Production 225
Building Products & Furnishings 67 Oil & Gas Midstream 231
Cable & Satellite 70 Oil & Gas Refining & Marketing 235
Car Rental & Leasing 73 Oil & Gas Services 239
Casinos & Gaming 75 Pharmaceuticals 242
Chemicals 79 Processed Foods 247
Coal Operations 83 Professional Services 252
Commercial Banks 89 Pulp & Paper Products 254
Construction Materials 93 Rail Transportation 257
Consumer Finance 97 Real Estate Owners, Developers & Investment Trusts 259
Containers & Packaging 100 Real Estate Services 262
Cruise Lines 104 Restaurants 264
Drug Retailers & Convenience Stores 108 Road Transportation 268
E-Commerce 111 Security & Commodity Exchanges 271
Education 114 Semiconductors 274
Electric Utilities 116 Software & IT Services 278
Electrical & Electronic Equipment 122 Solar Energy 283
Electronic Manufacturing Svcs. & Original Design Mfg. 125 Telecommunications 287
Engineering & Construction Services 129 Tobacco 291
Food Retailers & Distributors 132 Toys & Sporting Goods 293
Forestry & Logging 138 Waste Management 295
Fuel Cells & Industrial Batteries 141 Water Utilities 299
Gas Utilities 144 Wind Energy 303
18 19
ADVERTISING & MARKETING
SERVICES SECTOR
l Likely has material impact ¡ Likely does not have material impact
l Revenue l Expenses l Assets l Liabilities l Cost of capital
Exposure to sustainability factors
Value Rank* (number of metrics) Disclosure Financial
topic What’s measured? Value drivers impact
Environment
# of companies 9 56
Social capital Social capital
Market cap US$33.3B 65
Employment 137.0K 54 Human capital Advertising The amount of legal Regulatory or legal action llll
integrity and regulatory fines and due to failure to ensure truth
Business model settlements associated in advertising, affecting
Revenue US$28.4B 64 and innovation with false, deceptive, or liabilities.
Leadership unfair advertising.
Net income US$1.5B 59 and governance Other impacts:
The percentage of campaigns • Reputational impacts
0 5 10 15
5-year ROA 2.9% 53 reviewed for adherence and deteriorating client
Industry exposure Market average exposure
with the Advertising Self- relationships, affecting
Industry market beta 0.99 43 Regulatory Council’s (ASRC) brand value and
standard, and the percentage long-term growth
State of disclosure Top companies (in Russell 3000)** of those in compliance. • High-profile scandals,
% disclosure 70% 65 Omnicom Group Inc. affecting license to operate
The percentage of campaigns
and risk premium
Interpublic Group of Cos Inc. that promote products • Regulatory restriction on
% boilerplate 47% 44 or services deemed socially
Clear Channel Outdoor Holdings Inc. advertising certain products
*Out of 79 industries MDC Partners Inc. harmful and subject to
or services, affecting
National CineMedia Inc. restrictions or taxes on use.
revenues
**As of the date of this publication
Data privacy Discussions of policies Limits on the use of customer lll
and practices relating to data, affecting efficacy of
behavioral advertising and advertising and marketing
Industry description State of disclosure consumer privacy. and limiting ability to provide
The industry creates advertising In line with sector-wide practices, the certain services, in turn
The percentage of online
campaigns for use in media, display, or use of boilerplate language (47%) is advertising impressions
impacting revenues.
direct mail advertising, and provides the most common in the industry. This that are targeted to Other impacts:
related services. Advertising and mar- is especially true for disclosure on custom audiences. • Reputational impacts,
keting companies serve businesses that socially-oriented topics, such as “Data affecting brand value and
The amount of legal
long-term growth
primarily sell consumer and technology Privacy” and “Advertising Integrity.” and regulatory fines and • Regulatory compliance costs
products, entertainment, and financial Only a handful of companies analyzed settlements associated with
and operational expenses to
consumer privacy.
and telecommunication services. For provide disclosure on “Workforce ensure privacy
• Remediation costs, penalties,
any ad campaign, the same company may Diversity & Inclusion.” When available,
and liabilities from customer
be engaged in some or all service aspects, the mix of disclosure for this topic is or regulatory action
from graphic arts and content creation to evenly split between boilerplate, tailored • Exposure of data privacy
data analytics, marketing research, and narrative, and metrics. violations, affecting
media planning and buying. risk profile
Exposure to financial impact
Human capital
Sustainability-related risks Consumer protection laws have
and opportunities rules against deceptive or misleading Workforce The percentage of Stronger innovation and llll
Through its power of persuasion, this advertising. There is also public and diversity and gender and racial/ethnic superior ability to cater to a
industry can act as an agent of change regulatory concerns about privacy inclusion group representation diverse customer and end-
for executives, for consumer base, with impact
or perpetuate the status quo. In the age due to the rise of online and targeted professionals, and for on both market share and
of big data and targeted advertising, the advertising. Additionally, a company’s all others. pricing power.
industry faces risks and opportunities ability to attract and retain diverse tal- Other impacts:
from consumer protection to privacy ent significantly influences the results • Reputation and ability
concerns. Similarly, workforce diversity of its operations as it fosters affinity to attract employees
• Liabilities from
is key for an industry focused on creating with and understanding of a diverse
discrimination lawsuits
appealing ad campaigns. customer base. • Operating costs related to
recruiting, developing, and
retaining employees
20 21
AEROSPACE & DEFENSE
RESOURCE TRANSFORMATION SECTOR
Environment
# of companies 32 27
Social capital Environment
Employment 1.0M 10 Human capital Energy Total energy consumed, Operating costs associated ll l
management the percentage that with energy use
Business model is grid electricity, and in manufacturing.
Revenue US$354.7B 13 and innovation the percentage that
Leadership Other impacts:
is renewable. • Capital expenditures for
Net income US$28.3B 12 and governance
energy-related projects
0 5 10 15
5-year ROA 5.7% 20
Industry market beta 0.95 47
Hazardous The percentage of waste that Operational efficiency and ll ll
waste is recycled and the amount cost structure impacts from
management of hazardous waste. using hazardous materials
State of disclosure Top companies (in Russell 3000)**
and disposing of waste.
The number and aggregate
% disclosure 80% 47 Boeing Co. volume of reportable spills Other impacts:
United Technologies Corp. and the amount recovered. • Regulatory penalties,
% boilerplate 64% 73
Lockheed Martin Corp. remediation liabilities, and
*Out of 79 industries General Dynamics Corp. compliance costs
• Perceived operational risk,
Northrop Grumman Corp.
affecting cost of capital
**As of the date of this publication • Capital expenditures
for handling
hazardous materials
Industry description State of disclosure
The industry is divided into three main Most companies analyzed disclose Social capital
segments: (1) commercial aircraft and information on the topics in the
parts manufacturing; (2) aerospace Provisional Standard. However, the
Data security The number of data security Reputational impacts lll l
breaches and the percentage and ability to combat
and defense parts manufacturing; and use of boilerplate language (64%) is of those breaches involving cyberattacks, affecting
(3) defense contractors that manufacture the highest for any industry in the sec- confidential information. revenues and
military aircraft, space vehicles, missile tor. This language is extensively used long-term growth
Discussions of approach to
systems, naval ships, and other com- to describe risks around topics, such as managing data security risks Other impacts:
mercial and military vehicles, as well as “Data Security,” “Product Safety,” and within company operations • Technologies and services
and products. that protect governments
firearms. Airlines and governments are “Business Ethics.” In addition, the fuel against cyber threats
the main customers of the industry. economy and supply chain topics have • R&D and capital
low levels of disclosure. expenditures for
Sustainability-related risks technology and
system upgrades
and opportunities Exposure to financial impact • Regulatory compliance
Global challenges, such as climate Increasing regulatory focus on the costs and operational
change, resource constraints, and safety environmental impacts of manufac- expenses to ensure
and security issues, are intensifying reg- turing can drive higher costs of waste data security
• Penalties and liabilities
ulatory action and customer pressures management. Issues related to corrup- from customer or
around the need for improved corporate tion, bribery, and the critical materials regulatory action
sustainability performance. In a time sourcing can also influence costs. Airline • High-profile data security
of changing geopolitical environments, clients generally face low profit margins, breaches, affecting
risk profile
decreasing government spending, and and the U.S. military has prioritized
pricing pressures, companies need efficiency; both of these factors drive
to innovate and optimize product and demand for more fuel-efficient products.
cost choices to meet market demands Also cyber threats can impact safety in
while reducing environmental and operations, affecting performance.
social externalities.
22 23
l Likely has material impact ¡ Likely does not have material impact l Likely has material impact ¡ Likely does not have material impact
l Revenue l Expenses l Assets l Liabilities l Cost of capital l Revenue l Expenses l Assets l Liabilities l Cost of capital
Disclosure Financial Disclosure Financial

topic What’s measured? Value drivers impact topic What’s measured? Value drivers impact
Product safety The number of recalls, and Reputational impacts lllll Supply chain The number of counterfeit Sourcing and efficient use lll l
total units recalled. or regulatory action to management parts detected and the of key materials, affecting
ban certain products or and materials percentage that are avoided. input costs or availability.
The number of Airworthiness
components, affecting sourcing
Directives received, and total The percentage of materials Other impacts:
revenues and market share.
units affected. costs for items containing • Market share and revenue
Other impacts: critical materials. impacts from counterfeit
The amount of legal • Liabilities from injury, parts in the supply chain
and regulatory fines and The percentage of
death, or property • Production disruptions,
settlements associated with tungsten, tin, tantalum,
damage claims leading to lost revenue
product safety. • Product recalls and
and gold smelters within • Regulatory compliance
the supply chain that are
regulatory penalties, costs associated with
verified as conflict-free.
creating one-time costs conflict minerals
• Ongoing safety issues, Discussion of the • Reputational
influencing risk profile management of risks impacts, affecting
associated with the use long-term growth
Business model and innovation of critical materials and • R&D expenses for
conflict minerals. alternative inputs
• Heavy reliance on critical
Fuel economy Revenue from alternative Emphasis on efficiency in ll l materials but a lack of
and emissions energy-related products. purchasing decisions of
in use-phase private- and public-sector ability to source them
Discussion of strategies and effectively, possibly
customers, influencing
approach to address fuel resulting in higher
revenues and market
economy and greenhouse risk premiums
share expansion.
gas emissions of products.
Other impacts:
• Product recalls, creating
one-time costs; repeated
recalls, influencing
risk profile
• Regulatory penalties
• R&D and capital
expenditures for improved
fuel economy and
lower emissions
Leadership and governance
Business ethics The amount of legal Violations of anti-corruption llll

and regulatory fines and and anti-bribery laws,
settlements associated with leading to legal and
incidents of corruption, regulatory penalties.
bribery, and/or illicit
Other impacts:
international trade. • Reputational impacts
Revenue from countries and regulatory actions,
ranked in the “E” or “F” affecting ability to
Band of Transparency do business and
International’s long-term growth
Government Defense • Record of
Anti-Corruption Index. non-compliance,
resulting in higher
Description of processes to
risk premiums
manage business ethics risks
throughout the value chain.
24 25
AGRICULTURAL PRODUCTS
CONSUMPTION I SECTOR
Environment
# of companies 9 56
Employment 100.4K 60 Human capital Greenhouse Gross global Scope 1 Efforts to reduce and report l l
gas emissions emissions and biogenic emissions, as well as the
Business model carbon dioxide direct price on carbon,
Revenue US$130.3B 37 and innovation (CO2) emissions. affecting operating and
Leadership capital expenditures.
Net income US$3.3B 46 and governance Description of long- and
short-term strategy or Other impacts:
0 5 10 15
5-year ROA 3.6% 41 plan to manage Scope 1 • Potential diminished yields
emissions, emission- and saleable output from
Industry market beta 1.11 32 reduction targets, and an lower nitrogen fertilizer
analysis of performance use to reduce emissions
State of disclosure Top companies (in Russell 3000)** against those targets. • Potential for stronger
% disclosure 82% 40 Archer-Daniels-Midland Co. demand from renewable
fuel producers due to
Bunge Ltd.
% boilerplate 53% 58 lower lifecycle emissions
Ingredion Inc. • Emissions reduction,
*Out of 79 industries Seaboard Corp. possibly improving
Andersons Inc. operational efficiency and
generate net cost savings
• Emissions reduction
efforts, possibly lowering
business uncertainty and
Industry description which could be addressed through inno- risk premiums
The industry is engaged in growing; vating farming and sourcing • Revenue opportunity from
processing; trading; distributing practices and more resilient crops. sale of carbon credits
• Potential impact on
vegetables and fruits; and producing
permits for setting up
and milling agricultural commodities, State of disclosure or expanding facilities
including grains, sugar, consumable Most companies analyzed disclose
oils, maize, soybeans, and animal feed. information on several of the topics Energy and Operational energy Operating costs l l
Agricultural products companies are also included in the Provisional Standard. fleet fuel consumed, the associated with energy use
management percentage in operations.
involved in wholesale and distribution However, most reporting is boilerplate that is grid electricity,
of products. Vertically integrated com- (53%), especially for topics related to Other impacts:
and the percentage • Capital
expenditures for
panies operate farms, crop-processing climate change, food safety, health, and that is renewable.
facilities, and storage and distribution supply chain management. Only half of Fleet fuel consumed and and fleet management
networks. Companies source a substan- companies analyzed provide disclosure the percentage that is
tial part of commodities from third-party on risks from “GHG Emissions.” renewable.
growers globally.
Sustainability-related risks In the context of stringent environmen-
and opportunities tal and safety regulations and shifts in
With global population growth and consumer preferences, significant GHG
lifestyle changes increasing the demand emissions, pollution, food spoilage, and
for food, the challenge is to meet this poor working conditions could affect
demand–in a world where climate agricultural product demand or supply.
change can significantly affect yields– Inefficient use of key natural resource
without jeopardizing natural resources inputs, like water, can also lead to higher
or human health. Intensive agricultural operating costs or unstable supplies.
production can impact biodiversity, Moreover, climate change will likely
soil, and water; and cause deforestation, affect crop yields, with implications for
revenues and profitability.
26 27

Water Total water withdrawn Risk of crop failure from lll l Social capital
withdrawal and total water water stress or production
consumed, along with the disruptions that result Food safety Global Food Safety Initiative Reputational impacts, lllll
percentage of each from from constraints (or from and health audit conformance: major customer preferences
water-stressed regions. regulatory restrictions) concerns non-conformance rate for GMO-free products,
in water-stressed areas, and associated corrective and regulatory actions,
Discussions of water
affecting revenues and/or action rate; as well as minor all affecting demand and
withdrawal risks and
risk premiums. non-conformance rate market share.
description of management
strategies and practices to Other impacts: and associated corrective
Other impacts:
mitigate those risks. • Operating costs action rate. • Food product recalls
associated with water The percentage of and safety incidents,
use and irrigation agricultural products creating one-time costs;
• Value of water rights, sourced from suppliers and repeated incidents,
affecting intangible assets certified to a Global Food influencing risk profile
• Capital expenditures Safety Initiative scheme. • Legal liabilities from
to install more safety issues
efficient systems The number of recalls issued • R&D and capital
• R&D and capital and total amount of food
expenditures for safety
expenditures to improve product recalled.
standards and supply
agricultural processes The description of chain traceability
• Reputational impacts, strategies to manage • Operational efficiency
affecting license the use of genetically and cost structure
to operate modified organisms. impacts from supply
chain traceability
Land use and Description of strategies Impacts on crop yields lllll
ecological to manage land use and or regulatory restrictions Human capital
impacts ecological impacts. on the use of agrochemicals
or land resources, Fair labor The percentage of farms Strong worker health and llll
The volume of wastewater
affecting volume of practices and and facilities certified for safety and labor standards,
reused and volume of
saleable products. workforce fair labor practices. leading to operational
wastewater discharged
to the environment. Other impacts: health efficiencies and productivity
The total recordable
• Land value write-downs and safety improvements.
The number of incidents injury rate, fatality rate,
due to long-term and near-miss frequency Other impacts:
of non-compliance with
degradation rate for direct employees • Regulatory penalties and
water-quality permits, • Regulatory penalties and
standards, and regulations. and seasonal and corrective actions costs
compliance costs related migrant employees. • Liabilities from
The amount of fertilizer to land or water pollution employee lawsuits
consumption by • Operating costs The description of efforts to • Operating costs for
nitrogen, phosphate, and related to fertilizer and assess, monitor, and reduce
certifying farms with fair
potassium-based fertilizers. pesticide application exposure of direct, seasonal,
labor practices
• R&D and capital and migrant employees • Regulation regarding
The amount of pesticide to pesticides.
expenditures to migrant and child
consumption by
improve land use labor, possibly creating
hazard level.
practices and meet unanticipated labor costs
regulatory requirements or shortages
• Reputational impacts,
affecting license to
operate and lowering
demand from food and
beverage companies
concerned about their
supply chains
28 29

Business model and innovation Management Discussion of positions on Long-term public and l
of the legal the regulatory and political political support, affecting
Climate The amount of crop losses Risk of crop failure ll l and regulatory environment related to social license to operate
change and percentage that is and impacts on yields, environment environmental and social and intangible assets.
impacts on offset through financial affecting revenues and factors, and description of
Other impacts:
crop yields mechanisms. long-term growth. efforts to manage risks and • Regulatory uncertainty,
opportunities presented.
The average crop yield and Other impacts: affecting risk profile
five-year standard deviation • R&D expenditures for new
per major crop type by cultivation methods or
major operating region. crop varieties
• Operating costs for
The identification of
climate adaptation efforts
principal crops and • Crop insurance costs
discussion of risks and
affected by risk of
opportunities presented
crop failure due to
by climate change.
climate change
• Ability to successfully
adapt to climate change
challenges, affecting
risk premiums
Environmental The percentage of Environmental and social lll l

and social agricultural raw performance of suppliers,
impacts of materials sourced from affecting input costs
ingredient water-stressed regions. or availability.
supply chains
The description of the Other impacts:
management strategy • Production disruptions,
for environmental and leading to lost revenue
social risks arising from • Heavy reliance on certain
contract growing and key ingredients but a
commodity sourcing. lack of ability to source
them effectively, possibly
The percentage of
resulting in higher
agricultural raw materials
risk premiums
that are certified to a third- • Reputational impacts
party environmental and/or
and rising customer
social standard.
demand for responsibly-
sourced products,
affecting revenues and
long-term growth
• Operating costs from
supply chain management
programs that
incorporate social and
environmental factors
30 31
AIR FREIGHT & LOGISTICS
TRANSPORTATION SECTOR

Value Rank* (number of metrics)
Environment
Social capital
Employment 791.7K 13 Human capital
Business model
Revenue US$143.0B 34 and innovation
Leadership
0 5 10 15
5-year ROA 6.6% 11

% disclosure 83% 37 United Parcel Service Inc.
FedEx Corp.
CH Robinson Worldwide Inc.
*Out of 79 industries Expeditors International of Washington Inc.
Ryder System Inc.

Air Freight & Logistics (AFL) companies Most companies analyzed disclose infor-
provide freight services and transpor- mation on the topics in the Provisional
tation logistics. There are three main Standard; however, such disclosure is
industry segments: air freight trans- mostly boilerplate (43%). This language
portation, post and courier services, is more common for supply chain, safety,
and transportation logistics services. and fuel-related topics. On the other
Transportation logistics services include hand, quantitative disclosure is common
contracting with road, rail, marine, and for the “Fair Labor Practices” topic.
air freight companies to select and hire
appropriate transportation. Exposure to financial impact
Regulators have put the transportation
Sustainability-related risks sector under scrutiny due to its contri-
and opportunities bution to GHG emissions and other air
The industry is essential in facilitating pollutants. Furthermore, safety manage-
global trade. A common thread for AFL ment is important not only to limit harm
companies is their reliance on fossil to the environment and society, but also
fuels for transportation, either directly to minimize delays and property damage.
through the use of fuels in company AFL companies’ and their contractors’
fleets or indirectly through purchase of use of various common capitals, like
transportation services. Additionally, the natural resources, public infrastructure,
industry’s heavy reliance on contractors and human capital, drives their sustain-
raises many supply chain issues, includ- ability impacts and, consequently, their
ing the risk of misclassifying workers. impacts on value through regulations
Finally, industry players compete to or public reaction.
transport goods within aggressive time-
frames, and haste may breed accidents.
33

Environment Leadership and governance
Environmental The gross global Scope 1 Operating costs associated lll l Accidents Description of Safety ratings and records, lllll
footprint of emissions. with fuel use. and safety implementation and affecting demand for
fuel use management outcomes of Safety services and ability to
Descriptions of long- and Other impacts:
Management System. continue to conduct
short-term strategy or • Capital expenditures for
intermodal shipments.
plan to manage Scope 1 new technology and The number of
emissions, emissions fleet management to aviation accidents. Other impacts:
reduction targets, and an reduce fuel consumption • Cease-and-desist orders
The number of road
analysis of performance and emissions or lack of compliance,
accidents and incidents.
against those targets. • Potentially unanticipated disrupting services
regulatory penalties or The total recordable injury • Liabilities from regulatory
Total fuel consumption;
compliance costs due to rate and fatality rate for and legal actions
the percentage that
evolving GHG regulations full-time employees and • Regulatory penalties
is renewable; and the • Potential to offer contract employees. • Loss of assets and
percentage for road
customers new one-time costs
transport and for Safety Measurement System
carbon-neutral shipping from high-magnitude,
air transport. Behavior Analysis and Safety
services for an increased low-probability accidents
Improvement Category • Operating costs related to
Air emissions for the price premium
(BASIC) percentiles for:
following pollutants: • Growth opportunities labor and safety standards
Unsafe Driving, Hours- • Capital expenditures for
NOX, SOX, and particulate and market expansion
of-Service Compliance,
matter (PM). from reducing total safety compliance
Driver Fitness, Controlled • Poor safety records,
emissions for customers
Substances/Alcohol,
and offering more affecting cost of capital
Vehicle Maintenance,
competitive rates due to
and Hazardous
fuel savings, resulting in
Materials Compliance.
reputational benefits
• Operational risks from fuel
cost volatility, impacting Supply chain The percentage of carriers For logistics companies ll l
risk premiums management with BASIC percentiles that broker transportation
above the Federal services from other carriers:
Motor Carrier Safety • Safety incidents in the
Human capital
Administration (FMCSA) supply chain, affecting
intervention threshold. timeliness of services and
Fair labor The percentage of drivers Misclassification of ll l integrity of cargo, with
practices who are classified as employees and contractors, Complete greenhouse
market share impacts
independent contractors. affecting compensation gas footprint across • Price premiums for
costs and creating liabilities transport modes.
The amount of legal low-carbon and
for past wage, tax, and carbon-neutral shipping
and regulatory fines and
pension obligations. services due to increasing
settlements associated with
labor law violations. Other impacts: customer demand
• Liabilitiesfrom regulatory
and legal actions
• Regulatory penalties from
labor law violations
• Ability to recruit and
retain workforce,
affecting operating costs
and revenue growth
34 35
AIRLINES
Environment
Employment 397.7K 31 Human capital Environmental The gross global Scope 1 Operating costs associated l l
footprint of emissions. with fuel use.
Business model fuel use
Revenue US$164.0B 30 and innovation Description of long- and Other impacts:
Leadership short-term strategy or • Capital expenditures for
Net income US$24.1B 15 and governance plan to manage Scope 1 new technology and
emissions, emissions fleet management to
0 5 10 15
5-year ROA 4.8% 30 reduction targets, and an reduce fuel consumption
analysis of performance and emissions
Industry market beta 1.15 28 against those targets. • Regulatory compliance
costs
State of disclosure Top companies (in Russell 3000)** Total fuel consumption • Operational risks from fuel
and the percentage that is
% disclosure 93% 18 American Airlines Group Inc. cost volatility, impacting
renewable.
risk premiums
Delta Air Lines Inc.
% boilerplate 13% 6 The notional amount of fuel
United Continental Holdings Inc. hedged, by maturity date.
*Out of 79 industries Southwest Airlines Co.
JetBlue Airways Corp. Human capital
Labor relations The percentage of active Service disruptions from llll
workforce covered under labor disputes, affecting
collective-bargaining revenues, brand value, and
agreements, broken market share.
The Airlines industry provides air trans- The industry is characterized by high down by U.S. and
Other impacts:
portation to passengers for both leisure levels of disclosure across all topics foreign employees. • Poorlabor relations,
and business purposes. This includes in the Provisional Standard; only 8% The number and duration creating unanticipated
commercial full-service carriers that of entries analyzed were categorized of strikes and lockouts. wage and
typically use a hub-and-spoke model to as “No disclosure.” In addition, the use compensation increases
design their routes, low-cost carriers that of metrics (53%) is common, particularly
usually offer a smaller number of routes, on the “Environmental Footprint of
and regional carriers that typically oper- Fuel Use” and “Labor Relations” topics. Competitive The amount of legal Violations of competition ll ll
ate under contract for full-service carriers. Compared to other transportation indus- behavior and regulatory fines and regulations, leading to fines
Most airlines also have a cargo segment. tries, airlines provide better disclosures settlements associated with and penalties.
anti-competitive practices.
on fuel use. Other impacts:
Sustainability-related risks • Impact on merger plans
due to anti-trust concerns,
and opportunities Exposure to financial impact
limiting ability to grow
Climate change mitigation efforts have The industry’s use of public goods, by acquisitions
begun to focus on GHG and other air such as airspace, drives its sustainabil- • Increased regulatory
emissions of airlines at high altitude, ity and associated financial impacts scrutiny, impacting ability
to raise prices
particularly with industry growth. The through regulations or public reaction. • Record of non-compliance
industry must also address increasingly As a fuel-intensive industry with large or regulatory scrutiny,
stringent safety standards to maintain its direct emissions contributing to climate resulting in higher
image as the safest means of transporta- change, the industry attracts regula- risk premium
tion. Moreover, fully privatized airlines tory scrutiny. At the same time, volatile
struggle to stay profitable with a high- energy costs provide incentives for
ly-unionized workforce and high capital efficient fuel management. Further, com-
requirements. Finally, to create econo- panies’ social license to operate depends
mies of scale, airlines operate through on maintaining high safety standards.
alliances and are in a constant state of Airlines also face scrutiny related to anti-
consolidation, raising antitrust concerns. trust, impacting their growth potential.
36 37
ALCOHOLIC BEVERAGES
Disclosure Financial Value Rank* (number of metrics)
Environment
# of companies 6 66
Accidents Description of Poor safety records, lllll Market cap US$76.8B 51 Social capital
and safety implementation and affecting cost of capital.
management outcomes of Safety Human capital
Other impacts: Employment 22.8K 70
Management System. • Liabilities from regulatory
Business model
The number of accidents. and legal actions due Revenue US$14.2B 68 and innovation
to accidents
The number of • Regulatory penalties
Leadership
governmental enforcement Net income US$2.0B 55 and governance
• Loss of assets and
actions of aviation 0 5 10 15
one-time costs 5-year ROA 6.2% 15
safety regulations. Industry exposure Market average exposure
from high-magnitude,
low-probability events Industry market beta 0.66 71
• Operating costs related to
labor and safety standards State of disclosure Top companies (in Russell 3000)**
• Capital expenditures for
% disclosure 94% 15 Constellation Brands Inc.
safety compliance
• Reputational Molson Coors Brewing Co.
impacts, affecting Brown-Forman Corp.
long-term growth *Out of 79 industries Boston Beer Co. Inc.
MGP Ingredients Inc.

The industry includes companies that The industry is characterized by high
brew, distill, and manufacture various levels of disclosure across all topics
alcoholic beverages, including beer, wine, included in the Provisional Standard:
and liquor. Companies in this industry only 6% of entries analyzed were catego-
transform agricultural products, includ- rized as “No disclosure.” Most reporting,
ing sugar, barley, and corn, into finished however, is boilerplate (48%), especially
products. The largest companies have for topics related to supply chain man-
global operations, with portfolios of agement and responsible marketing and
numerous branded products. consumption of alcohol. Disclosure on
water management risks is relatively
Sustainability-related risks more quantitative than other topics and
and opportunities industries in the sector.
Energy management, resource use, and
water scarcity have created a new set Exposure to financial impact
of opportunities and challenges. The Fluctuations in the availability and
industry must look toward resource effi- pricing of energy and water inputs can
ciency, ensure environmentally sensible affect operations. The sourcing of key
packaging and lifecycle management, as agricultural ingredients could have
well as address environmental and social impacts on, and be impacted by, various
risks associated with multi-layered sup- social and environmental issues. Further,
ply chains. Further, increased concern because alcoholic drinks are linked with
over the health consequences and social negative social impacts, the industry’s
externalities of alcohol consumption has license to operate is at risk. Finally,
created challenges for the industry in the addressing the resource needs in manu-
form of various marketing requirements. facturing beverage containers and their
disposal can reduce costs and enhance
brand value.
38 39

Environment Business model and innovation
Energy The total energy Operating costs associated l l Packaging Total weight of packaging, Operational efficiencies l l
management consumption, the with energy use in lifecycle the percentage made from from optimizing materials
percentage that is grid operations. management recycled or renewable usage and transportation,
electricity, and percentage materials, and the affecting cost structure.
Other impacts:
that is renewable. percentage that is recyclable
• Capital expenditures for Other impacts:
or compostable. • End-of-life or recycling
• Potential energy supply Description of strategies to legislation, affecting
disruptions, affecting reduce the environmental product prices and
risk profile impact of packaging influencing market
throughout its lifecycle. share expansion
Water The total water withdrawn Production disruptions lll l • Regulatory
management and total water consumed, that result from water compliance costs
and percentage of each in constraints in water-stressed • R&D for improved
water-stressed regions. areas, affecting revenues packaging
and/or risk premiums. lifecycle management
Discussion of water
management risks and Other impacts:
description of management • Operating costs associated
strategies and practices to with water use
mitigate those risks. • Value of water rights, Environmental The percentage of beverage Environmental and social lll l
affecting intangible assets and social ingredients sourced from performance of suppliers,
• Capital expenditures impacts of water-stressed regions. affecting input costs
to install more ingredient or availability.
The suppliers’ social and
efficient systems supply chains
environmental responsibility Other impacts:
• Reputational impacts, audit conformance: major • Production disruptions,
affecting license non-conformance rate leading to lost revenue
to operate and associated corrective • Heavy reliance on certain
action rate, and minor key ingredients but a
Social capital non-conformance rate and lack of ability to source
associated corrective action them effectively, possibly
Responsible The number of advertising Non-compliance with lllll rate. resulting in higher
drinking and impressions and the labeling and marketing risk premiums.
The list of priority beverage • Reputational impacts
marketing percentage of those that codes and regulations, ingredients and discussion
are made on individuals particularly those focused and rising customer
of sourcing risks due to
above the legal drinking on advertising to underage demand for responsibly-
environmental and social
age. individuals, resulting sourced products,
considerations.
in regulatory and legal affecting revenues and
Notices of violations for long-term growth
liabilities.
non-conformance with • Operating costs from
industry and regulatory Other impacts: supply chain management
marketing and/or • Reputational impacts, programs that
labeling codes. affecting brand value and incorporate social and
license to operate environmental factors
The amount of legal • Potential divestment
risk due to significant
concerns about
labeling and/or marketing
social externalities
practices.
Description of efforts
to promote responsible
consumption of alcohol.
40 41
APPAREL, ACCESSORIES
& FOOTWEAR
CONSUMPTION II SECTOR

Environment
Social capital
Employment 1.1M 7 Human capital
Business model
Leadership
0 5 10 15
5-year ROA 9.1% 2

% disclosure 93% 20 NIKE Inc.
The TJX Cos Inc.
The Gap Inc.
*Out of 79 industries VF Corp.
L Brands Inc.
Industry description included in the Provisional Standard.

Companies in this industry are involved Only 8% of entries analyzed were marked
in the design, manufacturing, wholesal- as “No disclosure.” This is the lowest
ing, and retailing of various products, figure in the sector. However, the major-
including men’s, women’s, and children’s ity of disclosure is boilerplate (58%),
clothing; handbags; jewelry; watches; which is tied for the highest level in the
and footwear. The industry relies sector. The use of boilerplate is most
heavily on outsourced manufacturing common for disclosure on labor condi-
operations, especially in Asia and other tions and environmental impacts along
emerging markets. the supply chain.
Sustainability-related risks Exposure to financial impact

and opportunities Companies in the industry are exposed
Labor conditions and environmental to potential financial impacts from:
impacts in the supply chain, along (i) increased regulatory and consumer
with concerns over the use of hazardous scrutiny for the use of certain chemicals
chemicals, present ongoing opportu- in products, which can influence brand
nities and challenges for the industry. value and compliance costs; (ii) reliance
Further, a growing focus on the impact on natural materials, such as cotton,
of climate change and resource scar- whose availability and pricing is influ-
city for the industry’s key inputs, enced by climate change, water scarcity,
including cotton, has driven the need and competing resource demands; and
for innovation. (iii) supply chain labor conditions and
environmental impacts, which influence
State of disclosure reputation, purchase costs, and commu-
The industry is characterized by high nity opposition.
levels of disclosure across all topics
43

Social capital Labor The percentage of Tier 1 Reputational impacts, lll l

conditions suppliers; and percentage affecting brand
Management The description of Shift in demand towards llll in the of suppliers beyond Tier 1 value, revenues, and
of chemicals in processes to maintain products with lower supply chain that have been audited to long-term growth.
products compliance with restricted impacts, and regulatory a labor code of conduct,
Other impacts:
substances regulations. bans or restrictions and the percentage of those • Production and supply
on certain chemicals, that were conducted by a
The description of processes disruptions, leading to
affecting revenue and third-party auditor.
to assess and manage risks lost revenue
long-term growth. The priority • Cost structure impacts
associated with chemicals
in products. Other impacts: non-conformance from labor standards and
• Reputational impacts, rate and associated wages in the supply chain
affecting brand value corrective action rate • Higher risk premiums
• Product recalls, resulting for suppliers’ labor from poor labor standards
in one-time costs code of conduct audits.
Discussions of greatest
legal actions labor, environmental,
• R&D expenses to replace
health, and safety risks
harmful chemicals in the supply chain.
in products
• Capital expenditures
for implementing
Environmental The percentage of Tier 1 Environmental performance lll
impacts supplier facilities and of suppliers, affecting
innovative chemical
in the percentage of supplier purchasing costs or
management systems
supply chain facilities beyond Tier 1 product availability.
with wastewater discharge
Leadership and governance Other impacts:
meeting or exceeding • Reputational impacts,
legal requirements.
Raw materials The top five raw materials Environmental and lll l affecting brand value and
sourcing and used in products, by weight. social performance of The percentage of Tier 1 market share
innovation raw materials suppliers, suppliers and percentage • Operating costs from
The percentage of raw of suppliers beyond Tier 1 supply chain management
affecting raw material costs
materials that are who have completed programs that incorporate
or availability.
third-party certified to an the Sustainable Apparel environmental factors
environmental or social Other impacts: Coalition’s Higg Index
sustainability standard, • Production disruptions, Facility Module assessment
by standard. leading to lost revenue or equivalent environmental
• Heavy reliance on certain
data collection.
key raw materials and a
lack of ability to source
resulting in higher
risk premiums
• R&D expenses to develop
alternative materials
• Operating costs from raw
materials supply chain
management programs
that incorporate social
and environmental factors
affecting brand value
and ability to charge
price premiums
44 45
APPLIANCE MANUFACTURING
Environment
# of companies 6 66
Employment 170.5K 49 Human capital Product safety The number of recalls and Reputational impacts, llll
total units recalled. affecting demand and
Business model market share.
Revenue US$38.0B 58 and innovation The amount of legal
Leadership and regulatory fines and Other impacts:
Net income US$2.3B 51 and governance settlements associated with • Liabilities from personal
product safety. injury or property
0 5 10 15
5-year ROA 4.2% 35 damage claims
• Product recalls, creating
Industry market beta 1.03 38 one-time costs; and
repeated recalls,
State of disclosure Top companies (in Russell 3000)** influencing risk profile
% disclosure 50% 76 • Regulatory penalties and
Whirlpool Corp.
compliance costs
Stanley Black & Decker Inc. • Warranty claims
Snap-on Inc. • R&D expenditures for
*Out of 79 industries NACCO Industries Inc. product modifications
Libbey Inc. to improve safety
Business model and innovation
Industry description State of disclosure Product The percentage of eligible Regulations, industry lll
lifecycle products certified to an standards, and customer
The Appliance Manufacturing industry Compared to others in the sector, the environmental ENERGY STAR® standard. demand for energy and
includes companies involved in the industry is characterized by low levels impacts water efficiency appliances,
The percentage of
design and manufacturing of household of disclosure, with half of the entries cat- eligible products certified
influencing revenues and
market share.
appliances, such as refrigerators and egorized as “No disclosure.” Disclosure to an Association
washing machines; and hand tools, such levels on “Product Safety” are relatively of Home Appliance Other impacts:
Manufacturers (AHAM) • Take-back programs,
as chain saws, nail guns, drills, hammers, better than those for the “Product
sustainability standard. creating opportunities to
and screwdrivers. The industry sells Lifecycle Environmental Impacts” topic. build brand equity and
Description of efforts to
and manufactures products around the However, boilerplate language is exten- facilitate new sales
manage products’
world, primarily selling its products to sively used to provide information about end-of-life impacts.
• Operational efficiencies,
such as product and
consumers through retail locations. product safety-related risks.
supply chain optimization,
affecting cost structure
Sustainability-related risks Exposure to financial impact • Regulatory penalties and
and opportunities Product malfunctions can affect a compliance costs
• R&D and capital
Appliances facilitate accomplishing company’s social license to operate and
expenditures for
chores with relative ease and speed. On its sales, and potentially create legal improved product
the other hand, appliances are respon- liabilities. Moreover, efforts to address lifecycle management
sible for significant power and water a product’s environmental performance
consumption in homes, although energy- throughout its lifecycle, particularly in
and water-efficient appliances are helping relation to energy and water consump-
to lower the carbon and water footprint tion and end-of-life disposal, can help the
of households. Innovations to improve industry capture customer demand for
product recyclability are also critical sustainable products and comply with
to lower the environmental and health evolving disposal regulations.
impacts of materials usage. Product safety
is also key as product malfunctions can
cause serious injury and property damage.
46 47
ASSET MANAGEMENT
& CUSTODY ACTIVITIES
FINANCIALS SECTOR
Environment
Employment 212.5K 43 Human capital Transparent The amount of fines and Reputational impacts, lllll
information settlements associated with regulatory oversight,
Business model and fair advice failure to provide adequate, and client demand for
Revenue US$114.4B 41 and innovation for customers clear, and transparent greater transparency,
Leadership information about products all of which affecting
and services. market share and
0 5 10 15 long-term growth.
5-year ROA 1.3% 67 Descriptions of procedure
or programs to provide Other impacts:
Industry market beta 1.37 11 adequate, clear, and • Liabilities from legal and
transparent information regulatory actions
State of disclosure Top companies (in Russell 3000)** about products and • Regulatory penalties,
% disclosure 55% 73 Bank of New York Mellon Corp. services, including risks, compliance- and
suitability, and conflicts corrective action costs
Ameriprise Financial Inc.
% boilerplate 20% 10 of interest.
BlackRock Inc.
*Out of 79 industries State Street Corp. Human capital
Leucadia National Corp.
**As of the date of this publication Employee Discussions of variable Impacts on risk-adjusted l l
incentives and compensation policies returns, affecting AUM
risk taking and practices. inflows/redemptions
and management and
Industry description State of disclosure The percentage of total
incentive fees.
Companies in this industry manage The industry is characterized by low compensation that is
variable for executives and Other impacts:
financial investments and provide levels of disclosure, with 45% of entries
all others. • Reputational
financial planning for corporate, indi- categorized as “No disclosure.” This impacts, affecting
The percentage of variable
vidual, government, and institutional figure is the highest for any industry long-term growth
compensation that is
clients. Select companies in the Asset in the sector, and is mainly driven equity for executives and
Management segment are also engaged by lack of disclosure on a handful of all others.
in private equity and other investment topics, including “Employee Inclusion” The percentage of
structures, while Custody Activity and “Integration of Environmental, employee compensation,
providers manage record keeping and Social and Governance Risk Factors in which includes ex-post
adjustments for executives
account ownership issues. Investment Management & Advisory.”
and all others.
Relatively speaking, disclosure on the
Sustainability-related risks “Systemic Risk Management” topic is Employee The percentage of Stronger innovation and l
and opportunities more tailored to companies’ unique cir- inclusion gender and racial/ethnic superior ability to cater
While the industry helps customers cumstances versus other topics included group representation for to a diverse customer
executives and all others. base, with impact on AUM
meet specified investment goals, the in the Provisional Standard. inflow, and management
2008 financial crisis and subsequent and incentive fees.
regulatory developments highlight Exposure to financial impact Other impacts:
its potential social impact in terms Recent regulations have focused • Reputation and ability
of providing fair advice to customers on reducing risk-taking behavior and to attract employees
• Operating costs related
and managing risks at the entity and improving overall industry account-
to recruiting, developing,
economy-wide levels. Additionally, the ability, impacting operating costs and and retaining employees
industry’s collective impact on the allo- increasing regulatory risks. Specifically,
cation of capital creates a responsibility companies trading in complex deriv-
to integrate sustainability factors in atives products, those that are highly
investment decisions and management. leveraged, and those with significant
assets under management have attracted
the most regulatory scrutiny.
48 49

Business model and innovation Systemic risk Registered and unregistered Quality, transparency, and lllll
management assets under management. consistency of a firm’s
Integration of Discussions of how Portfolio performance, l l l The value of collateral
capital base, or regulatory
environmental, environmental, social, and affecting AUM inflow/ uncertainty, affecting cost
received from securities
social, and governance factors are redemptions, and incentive of capital.
lending and amount
governance integrated into investment and management fees. received from repurchase Other impacts:
risk factors in analysis and decisions, and agreements involving • Ability to absorb shocks
Other impacts:
investment of how this integration • Ability to capture clients’ assets. from financial and
management and intersects with fiduciary economic stress, affecting
new markets of The net exposure to written
advisory duties. asset value
environmentally credit derivatives.
The percentage of assets and socially • Reputational impacts,
under management, conscious investors Tier 1 common capital ratio, affecting license
by major asset class, that • Reputational Tier 1 capital ratio, Total to operate and
employ integration of impacts, affecting risk-based capital ratio, and long-term growth
ESG factors, along with long-term growth Tier 1 leverage ratio.
sustainability themed The Basel III Liquidity
investing, screening, and Coverage Ratio (LCR).
Impact investing.
The percentage of total
proxies voted, and number
of proxy votes that support
ESG shareholder proposals,
including percentage
resulting in company action.
The ratio of embedded
carbon dioxide emissions
of proved hydrocarbon
reserves held by
investees to total assets
under management.
Management The amount of legal Legal and regulatory lllll

of the legal and regulatory fines actions, affecting liabilities.
and regulatory and settlements
Other impacts:
environment associated with financial • Impact on ability to attract
fraud, and percentage
clients, affecting AUM
that resulted from
inflows/redemptions and
whistleblowing actions.
market share
The number of inquiries, • Regulatory penalties and
complaints, or issues compliance costs
received by legal and • Reputational impacts,
compliance office through affecting intangible assets
an internal monitoring • Exposure to regulatory
or reporting system; and actions and restrictions,
the percentage of those affecting risk premium
that were substantiated.
50 51
AUTO PARTS
Environment
Employment 683.5K 16 Human capital Energy Total energy consumption, Operating costs l l
management the percentage that associated with energy
Business model is grid electricity, and use in manufacturing.
0 5 10 15
5-year ROA 5.7% 19
Materials The amount of total waste Operational efficiency and l
efficiency from manufacturing, cost structure impacts from
and waste the percentage of waste materials efficiency and
management that is recycled, and the waste handling.
% disclosure 77% 57 Lear Corp. percentage of waste that is
Other impacts:
Goodyear Tire & Rubber Co. hazardous. • Regulatory penalties,
Delphi Automotive PLC remediation liabilities, and
*Out of 79 industries Johnson Controls International PLC compliance costs
Tenneco Inc.
pollution-control facilities
**As of the date of this publication and materials reuse
or recycling
• Re-using scrap materials
Industry description State of disclosure in manufacturing,
The Auto Parts industry supplies parts Most companies analyzed disclose infor- possibly affecting input
costs and raw material
to automakers, also known as original mation on the topics in the Provisional availability risks
equipment manufacturers (OEM). Standard. While most disclosure uses
The industry manufactures and assem- boilerplate language (38%), the use of Social capital
bles a wide variety of motor vehicle tailored narrative (33%) is also common,
parts and accessories, including engine in particular for the “Product Lifecycle Product safety The number of recalls and Reputational impacts, lllll
exhaust, alternative drivetrain and Management” topic. In contrast with the market share.
hybrid systems, as well as catalytic con- Automobiles industry, reporting by auto
Other impacts:
verters, aluminum wheels (rims), part manufacturers on “Product Safety” • Revenue loss from
tires, and onboard electrical and elec- is typically boilerplate. OEMs terminating
tronic equipment. supplier relationship
• Liabilities from vehicle
safety incidents or recalls
Sustainability-related risks OEMs face regulations that require • Product recalls, creating
and opportunities constant vehicle design innovations; one-time costs
With customer demand and regulatory these pressures are passed onto auto • Repeated recalls,
pressure for more fuel-efficient and parts suppliers. The design of auto influencing risk profile
safer vehicles, and for improved vehicle parts can reduce the significant envi-
end-of-life management, auto parts ronmental impacts associated with
companies play a crucial role in driving automobiles’ use-phase and end-of-life.
innovation and reducing environmental Further, growing resource constraints
and social impacts. At the same time, and volatile input prices affect the
as production has shifted to emerging materials-intensive parts-manufacturing
markets, where regulatory and public process, necessitating efficiency in
scrutiny of environmental impacts resource use and sourcing operations.
is increasing, auto parts companies face
pressures related to their energy use
and waste generation.
52 53
AUTOMOBILES
Environment
Business model and innovation Social capital
Product The total addressable OEM demand for auto ll Employment 473.4K 22 Human capital
lifecycle market and share of market parts that help reduce
management for products aimed at environmental impacts Business model
improved fuel efficiency of vehicles, affecting Revenue US$328.9B 14 and innovation
and/or reduced emissions. market share. Leadership
The percentage of products Other impacts:
0 5 10 15
sold that are recyclable • R&D and capital 5-year ROA 4.1% 37
or reusable. expenditures for
improved product Industry market beta 1.33 13
The weight of products
lifecycle management
and materials recycled State of disclosure Top companies (in Russell 3000)**
and innovations
or remanufactured. • Regulatory penalties and % disclosure 83% 38 Ford Motor Co.
compliance costs related to
Harley-Davidson Inc.
recovery and recycling of % boilerplate 20% 10
end of life materials Polaris Industries Inc.
• End-of-life recovered *Out of 79 industries Tesla Motors Inc.
materials used in **As of the date of this publication
manufacturing, possibly
affecting input costs and
raw material availability risks
Leadership and governance Industry description State of disclosure

The Automobiles industry designs, Disclosure by the companies analyzed
Competitive The amount of legal Violations of competition ll ll manufactures, and sells passenger vehi- is characterized by a relatively high use
behavior and regulatory fines and regulations, leading to fines cles, light trucks, and motorcycles that of metrics (43%) and tailored narrative
settlements associated with and penalties.
run on a range of traditional and alter- (20%) across most of the topics in
Other impacts: native fuels. Auto makers sell vehicles the Provisional Standard. Quantitative
• Reputational impacts from
to dealers for consumer retail sales and disclosure is common for the “Labor
price-fixing and market
manipulation, affecting directly to fleet customers. The indus- Relations” and “Product Safety” topics,
market share try is global and highly concentrated, while tailored narrative is typical for
• Increased regulatory with a large number of auto parts man- the fuel economy topic. Finally, a lack of
scrutiny, impacting ability
ufacturers within its supply chain. disclosure is common for the “Materials
to raise prices
• Record of non-compliance, Sourcing” topic.
resulting in higher Sustainability-related risks
risk premiums and opportunities Exposure to financial impact
Vehicle ownership is rising globally, Innovative designs can allow compa-
Materials The percentage of products, Sourcing and efficiency of ll l magnifying environmental externali- nies to meet growing demand for more
sourcing by revenue, that contain use of key materials, affecting
critical materials. input costs or availability. ties associated with tail pipe emissions energy efficient vehicles and meet the
The percentage of tungsten, Other impacts: and end-of-life disposal. Materials- high safety standards expected of the
tin, tantalum, and gold • Production disruptions, intensive manufacturing and constant industry. Evolving regulations increase
smelters and refiners within leading to lost revenue fleet upgrades exacerbate, and are pressure on manufacturers to manage
the supply chain that are • Regulatory compliance
affected by, global resource constraints. environmental impacts during vehicles’
verified as conflict-free. costs associated with
conflict minerals Therefore, factors, such as materials end-of-life through improved recy-
Discussion of the • R&D expenses for efficiency, vehicle safety, and fleet fuel clability and reduced use of hazardous
management of risks
associated with the use
alternative inputs efficiency are playing an important role substances. Finally, resource constraints
of critical materials and in the industry’s long-term growth. and volatile input prices can impact the
materials and a lack of
conflict minerals.
ability to source them materials-intensive manufacturing pro-
effectively, possibly facing cess, necessitating efficiency.
higher risk premiums
54 55

Materials The amount of total waste Operational efficiency ll Fuel economy The sales-weighted Regulatory requirements lll
efficiency from manufacturing and and cost structure and use phase average passenger fleet fuel and evolving consumer
and recycling the percentage of it that impacts from materials emissions economy consumption, demand for fuel-efficient
is recycled. efficiency, recycling, or emissions, by region. and low-emissions vehicles,
and remanufacturing. influencing revenues and
The weight of end-of-life The number of zero emission
market share expansion.
material recovered and the Other impacts: vehicles (ZEV) sold, hybrid
percentage that is recycled. • R&D and capital vehicles sold, and plug-in Other impacts:
expenditures in materials hybrid vehicles sold. • Reputational impacts,
The average recyclability
efficiency and recycling affecting brand value
of vehicles sold by weight. • Revenues from selling • Regulatory
manufacturing process compliance costs
by products • R&D and capital
• Regulatory penalties expenditures for
and compliance costs improved fuel economy
related to end-of-life and lower emissions in
management the use-phase
• Re-using and
recycling materials Leadership and governance
in manufacturing,
possibly affecting input Materials The percentage of materials Sourcing and efficiency lll l
costs and raw material sourcing costs for items containing of use of critical materials,
availability risks critical materials. affecting input costs
or availability.
Social capital The percentage of tungsten,
tin, tantalum, and gold Other impacts:
smelters and refiners within • Production disruptions,
Product safety The percentage of Reputational impacts, lllll the supply chain that are leading to lost revenue
models rated by New Car affecting demand and
verified as conflict-free. • Regulatory compliance
Assessment Program (NCAP) market share.
costs and reputational
with overall 5-star safety Discussion of the
Other impacts: impacts associated with
rating, by region. management of risks
• Higher cost structure due conflict minerals
associated with the use • R&D expenses for
The number of safety- to warranty costs
of critical materials and
related defect complaints, • Liabilities from vehicle alternative inputs
conflict minerals. • Heavy reliance on critical
percentage investigated. safety incidents or recalls
• Product recalls, creating materials and a lack of
The number of
one-time costs ability to source them
vehicles recalled. • Repeated recalls or poor effectively, resulting in
safety record, influencing higher risk premiums
risk profile
Human capital
Labor relations The percentage of active Production disruptions from ll l

workforce covered under labor disputes, affecting
collective-bargaining revenues, brand value, and
agreements, broken down by market share.
U.S. and foreign employees.
Other impacts:
The number and duration • Poorlabor
of strikes and lockouts. relations, creating
unanticipated wage and
compensation increases
56 57
BIOFUELS
RENEWABLE RESOURCES & ALTERNATIVE ENERGY SECTOR
Environment
# of companies 4 71
Employment 2.2K 78 Human capital Air quality Air emissions for the Operational efficiencies, ll l
following pollutants: leading to a lower cost
Business model NOx (excluding N2O), SOx, structure over time.
Revenue US$6.1B 75 and innovation volatile organic compounds,
particulate matter, and • Permitting delays and/
Net income (-US$75.8M) 43 and governance
hazardous air pollutants.
or revocations, affecting
0 5 10 15
5-year ROA 3.7% 40 The number of incidents production
of non-compliance with air • Capital expenditures
Industry market beta 2.09 1 quality permits, standards, to install best-in-class
and regulations. control technology
State of disclosure Top companies (in Russell 3000)** • Legal and regulatory fines
% disclosure 97% 9 Green Plains Inc. and penalties, impacting
one-time costs and
Renewable Energy Group Inc.
% boilerplate 75% 79 liabilities
Pacific Ethanol Inc.
REX American Resources Corp.
*Out of 79 industries Water The total water withdrawn Production disruptions ll l
**As of the date of this publication management and total water consumed, from water constraints
in and the percentage of each in water-stressed areas
manufacturing in water-stressed regions. and/or inadequate
wastewater treatment,
affecting revenues and/or
Industry description State of disclosure management risks and
risk premiums.
This industry produces biofuels, including The industry is characterized by high description of strategies
and practices to mitigate Other impacts:
ethanol and biodiesel, and processes the levels of disclosure across all topics those risks. • Operating costs associated
raw materials for production. Production included in the Provisional Standard: with water use and/or
The number of incidents of
is capital- and resource-intensive, and only 3% of entries analyzed were cate- non-compliance with water
wastewater treatment
• Value of water rights,
companies typically operate biorefineries, gorized as “No disclosure.” This is the quality permits, standards,
affecting intangible assets
where feedstocks are converted into lowest figure in the sector. However, the and regulations. • Capital expenditures
liquid fuel. Biofuel customers are chiefly majority of this disclosure (75%) is pro- to meet regulatory
fuel-blending and fuel-supply companies, vided using boilerplate language. requirements
• Regulatory penalties and
including major integrated oil companies.
compliance costs
Sustainability-related risks Profit margins in the industry tend to
and opportunities be slim due to high feedstock and energy
The industry is expected to continue costs. Resource efficiency and lower
growing due to global clean energy reg- pollution can help companies avoid
ulations. Companies may be challenged regulatory penalties or higher operating
to balance scale with environmental costs. Demand for biofuel feedstocks
and social impacts. The industry’s key can increase competition with food crop
issues include lifecycle emissions, thier production for land and resources, which
effect on food markets, and the environ- may drive concerns over food security.
mental impacts of feedstock production. The use of alternative feedstocks may
Achieving net carbon reductions is a lower the industry’s impact on global
central driver of biofuels policy world- food markets and enhance public sup-
wide, fostering competitive advantages. port. If a company’s regulatory initiatives
Companies may benefit from focus- are not aligned with positive, long-term
ing on advanced biofuels with lower societal outcomes, business uncertainty
environmental impacts rather than may result.
traditional biofuels.
58 59

Business model and innovation Operational Process Safety Incidents Operational risk llll
safety, Count, Process Safety perceptions, affecting
Product Top five feedstocks used Regulatory limits on the use lll l emergency Total Incident Rate, and cost of capital
formulation for biofuels production, of food-crop feedstocks, preparedness, Process Safety Incident
Other impacts:
and impacts by weight. impacting production and and response Severity Rate. • Loss of assets and
on food lowering revenues. one-time costs from
The percentage of
markets high-magnitude,
feedstock grown in Other impacts:
food-insecure countries. • R&D expenses to produce low-probability events
advanced biofuels • Production
• Higher cost of capital if downtime or reduced
cash flows are perceived capacity operations,
to be at risk of being affecting revenues
reduced or interrupted • Legal or regulatory action
• Reputational impacts resulting in liabilities
• Regulatory
Lifecycle Lifecycle greenhouse Lower carbon intensity of lll l compliance costs
emissions gas (GHG) emissions, biofuel products, helping
balance by biofuel type. capture market premiums Sourcing and Description of strategy Environmental impacts lll l
and maintain access to environmental to manage risks associated in the supply chain,
the growing renewable impacts of with environmental impacts including climate change
energy market. feedstock of feedstock production. impacts, resulting in
production higher raw material
Other impacts: The percentage of
purchase costs or reduced
• Improved energy biofuel production
feedstock availability.
efficiency, resulting in third-party certified
lower operating costs with an environmental Other impacts:
• Capital and R&D sustainability standard. • Recurring unexpected
expenditures to reduce disruption to, or lack
lifecycle emissions of, feedstock supplies,
• Reputational impacts affecting risk profile
• Feedstock sourcing
Leadership and governance practices, affecting access
to growing market
Management The amount of subsidies Long-term public and l l l
of the legal received through political support, affecting
and regulatory government programs. social license to operate
environment and intangible assets.
Discussion of positions on
the regulatory environment Other impacts:
and the description of • Regulatory uncertainty,
efforts to manage risks and affecting risk profile of
opportunities presented. industry or company
60 61
BIOTECHNOLOGY
HEALTH CARE SECTOR
Environment
Employment 69.0K 63 Human capital Energy, water Total annual energy Operating costs associated l
and waste consumption and with management of waste,
Business model efficiency the percentage that and energy and water use
Revenue US$90.5B 44 and innovation is renewable. in manufacturing.
Leadership
Net income US$23.0B 17 and governance Total water withdrawals, Other impacts:
the percentage from water- • Capital expenditures
0 5 10 15
5-year ROA 7.9% 7 stressed regions, and the for energy-, water-, and
percentage of process waste-related projects
Industry market beta 1.20 24 water recycled. • Potential energy and
water supply disruptions,
State of disclosure Top companies (in Russell 3000)** Overall process mass
affecting risk profile
intensity (PMI) and PMI,
% disclosure 81% 45 Gilead Sciences Inc. broken down for water and
Amgen Inc. organic solvents.
Biogen Inc. Amount of waste
*Out of 79 industries Celgene Corp. generated; and the
Regeneron Pharmaceuticals Inc. percentage recycled,
incinerated, and landfilled.
Social capital
Industry description the Provisional Standard; however,
Driven by research and development reporting is generally boilerplate (57%).
Access to Description of initiatives to Access to new markets l
medicines promote access to health through innovative pricing
(R&D), and characterized by a high risk This type of language is used more than care products in priority models, affecting revenues
of product failure, biotechnology com- in the Pharmaceuticals industry (33%), countries as defined by the and long-term growth.
Access to Medicine Index.
panies develop products that treat and it is most common for disclosure Other impacts:
medical needs through the technologi- on social topics, such as “Affordability List of products on the • Reputational impacts
WHO List of Prequalified
cal application of molecular and cellular & Fair Pricing,” “Ethical Marketing,” and
Medicinal Products.
systems. In developing drugs for a range “Safety of Clinical Trial Participants.”
of medical conditions, the industry Only a few companies provide disclosure Drug safety List of products listed in Reputational impacts lllll
relies on a highly-skilled workforce. on counterfeit drugs. and side the FDA MedWatch Safety and loss of sales,
effects Alerts for Human Medical affecting revenue.
Products database.
Sustainability-related risks Exposure to financial impact Other impacts:
and opportunities Clinical trial transparency influences Number of fatalities • Potential litigation
associated with products as associated with side
Companies face risks and opportuni- regulatory approvals of new drugs while reported in the FDA Adverse effects and other drug
ties relating to the expansion of health reducing drug safety and side effects Event Reporting System. safety-related events
insurance and an increased focus on risks in the future, which may impact List of products recalled.
• Repeated incidents,
reducing health care costs. The industry growth, revenue, reputation, and lia- influencing risk profile
Description of product • One-time costs for drug
requires strong intellectual property bilities. Innovative pricing models that stewardship initiatives take-back programs
protection to ensure returns on R&D expand access to and improve afford- to promote take-back • R&D expenses to
investments, which creates a significant ability of medicines can create growth and redistribution or strengthen drug safety
link to social capital; it also creates an opportunities in a highly regulated and safe permanent disposal
of unused product
expectation that clinical trials are trans- cost-conscious health care environment. at end-of-life. Where
parent and that medications are safe, Finally, promoting good manufacturing applicable, amount of
accessible, and affordable. and packaging practices, while reducing direct funding for such
the risks of counterfeit products, influ- initiatives and amount
of product (by weight)
State of disclosure ences product safety and profitability. accepted for take-back,
Most companies analyzed disclose reuse, or disposal.
information on the topics included in
62 63

Safety of Management process Likelihood of achieving llll Ethical Legal and regulatory fines Violations of regulations lll
clinical trial for ensuring quality and regulatory approval, marketing and settlements associated related to false marketing
participants patient safety during affecting revenue and with false marketing claims, and off-label use, leading to
clinical trials, including long-term growth. including violations for off- liabilities.
those conducted with label marketing prosecuted
Other impacts: Other impacts:
third-party clinical research • Liabilities and increased
under the False Claims Act. • Regulatory penalties and
organizations (CROs).
cost of capital for failure Description of corrective remediation costs
Description of processes for to conduct safe and actions implemented in • Reputational impacts,
obtaining informed consent effective clinical trials response to events. affecting brand value
of incentives offered to
Description of code of
participants; and of any
ethics governing promotion
clinical trials terminated due
of off-label use of products,
to failure to follow good
including mechanisms to
clinical practice standards.
ensure compliance.
Number of FDA clinical
investigator inspections Counterfeit Description of methods Erosion of public confidence l ll
of investigators used for drugs and technologies used and consumer demand due
clinical trials during the to maintain traceability to safety concerns and the
past year that resulted in of products throughout proliferation of counterfeit
Voluntary Action Indicated the supply chain and products, affecting revenue
(VAI) and Official Action prevent counterfeiting. and brand image.
Indicated (OAI).
Description of process Other impacts:
Legal and regulatory for alerting end customers • Implementation of
fines and settlements and business partners tracking systems and
associated with clinical of potential or known other efforts to prevent
trials in World Bank risks associated with sale of counterfeit
Low-income and Lower counterfeit products. drugs, impacting
Middle-income countries, operational expenses
and UN HDI Medium-High Number (and description)
development countries that of actions that led to raids,
are not captured by the seizure, arrests, and/or filing
World Bank rankings. of criminal charges related
to counterfeit products.
Description of corrective
actions implemented in Human capital
response to events.
Employee Description of talent Competition for talent ll
Affordability Number of settlements Reputational impacts l l l recruitment, recruitment and retention in a highly skilled industry
and fair of Abbreviated New Drug and increased regulatory development efforts for scientists impacts research and
pricing Applications (ANDA) oversight from steep and retention and other research and development efforts
litigation involving price increases, affecting development personnel. and the ability to bring
payments and/or provisions risk profile and long-term new products to market,
to delay bringing an growth potential. Training and development
affecting market share
authorized generic product expenditures per full-time
Other impacts: and long-term growth.
to market for a defined employee by expenditures
• Liabilities from legal and for industry or professional Other impacts:
time period.
regulatory actions qualification and advanced • Reputation and ability
Ratio of weighted average industry education and by to attract employees
rate of net price increases all other. • Operating costs related
(for all products) to the to recruiting, developing,
annual increase in the U.S. Voluntary and involuntary
and retaining employees
Consumer Price Index. turnover for executives/
senior managers, mid-level
managers, professionals,
and all others.
64 65
BUILDING PRODUCTS
& FURNISHINGS
Environment
Employee Total injury rate. Strong worker health lll Market cap US$70.2B 52 Social capital
health and safety performance,
Days away, restricted,
and safety leading to operational Human capital
or transferred rate. Employment 218.2K 42
efficiencies and productivity
Laboratory-acquired improvements. Business model
infection rate. Revenue US$61.1B 50 and innovation
Other impacts:
Leadership
• Liabilities from Net income US$2.8B 50 and governance
employee lawsuits
• Regulatory penalties and 0 5 10 15
5-year ROA 3.6% 42
corrective actions costs Industry exposure Market average exposure
• Reputation and ability Industry market beta 1.01 40
to attract employees and
expand operations State of disclosure Top companies (in Russell 3000)**
% disclosure 39% 79 Mohawk Industries Inc.
Masco Corp.
Fortune Brands Home & Security Inc.
Corruption Legal and regulatory Violations of anti-corruption lll *Out of 79 industries Leggett & Platt Inc.
and bribery fines and settlements and anti-bribery laws,
associated with bribery, leading to legal and Boise Cascade Co.
corruption, or other regulatory penalties. **As of the date of this publication
unethical business practices,
Other impacts:
including violations of the • Reputational impacts
Foreign Corrupt Practices
Act and those associated
and regulatory actions, Industry description State of disclosure
affecting ability The industry designs and manufactures The industry is characterized by low
with providing kickbacks
to do business and
to physicians.
long-term growth home improvement products, home and levels of disclosure, with 61% of records
Description of corrective • Record of facilitation office furnishings, and structural wood analyzed categorized as “No disclosure.”
actions implemented in payments or building materials. Key products include This figure is the highest for any indus-
response to these events. non-compliance, resulting flooring, ceiling tiles, furniture and fix- try in the sector, and is driven by lack
in higher risk premium
Description of code tures, wood trusses, plywood, paneling, of disclosure on all topics included in
of ethics governing and lumber. Companies typically sell the Provisional Standard, particularly
interactions with health
care professionals, including their products through distribution sourcing-related topics. When available,
mechanisms to ensure channels to retail stores or through inde- and in line with sector-wide practices,
employee compliance. pendent or company-owned dealerships. most reporting is boilerplate (32%).
Manufacturing Description of FDA Production disruptions, lllll Sustainability-related risks Exposure to financial impact
and supply enforcement actions taken leading to lost revenue.
chain quality in response to violations of and opportunities Product safety issues can affect the
Other impacts:
management current good manufacturing • Reputational
The industry faces pressure to ensure industry’s license to operate. The
practices (cGMP).
impacts, affecting that products do not pose risks to air industry faces pressure from regu-
Description of corrective long-term growth quality and human health. Increasing lators, customers, and sustainability
actions implemented in • Increased regulatory resource scarcity and the persistence of certifications to eliminate or provide
response to these actions. oversight and supply chain
some materials in the environment at transparency regarding the use of harm-
auditing costs, affecting
Percentage of facilities and
operating expenses end-of- life elevate the importance of ful chemicals in products, which can
Tier I suppliers participating • Regulatory penalties product reuse and reduced environmen- affect indoor air quality. Furthermore,
in the Rx-360 International
Pharmaceutical Supply tal impact. The industry is increasingly the drivers for addressing product sus-
Chain Consortium audit addressing its products’ lifecycle impacts tainability characteristics throughout the
program or equivalent by tackling issues such as energy use in lifecycle include regulation, customer
third-party audit programs
manufacturing, use of less toxic, safer demand, and customer sustainability
for integrity of supply chain
and ingredients. materials, and enhanced recyclability agendas. These factors primarily have
and managing risks and externalities in implications for company revenues and
the wood supply chains. cost structure.
66 67

Energy Total energy consumption, Operating costs l l Wood sourcing Total wood fiber purchased, Customer demand for lll l
management the percentage that associated with energy the percentage from certified products and
in is grid electricity, and use in manufacturing. third-party certified reputational impacts
manufacturing the percentage that is forestlands (by standard), from supply chain issues,
Other impacts:
renewable. • Capital expenditures for
and the percentage meeting affecting revenues and
other fiber sourcing market share.
standards (by standard).
Other impacts:
Social capital • Legal or regulatory
penalties and
Management Description of processes Customer demand, lllll compliance costs
of chemicals in to assess and manage risks sustainability certifications, • Heavy reliance on certain
products and/or hazards associated or regulatory bans or wood supplies (especially
with chemicals in products. restrictions on certain from specific regions) and
products or chemicals, a lack of ability to source
The percentage of them effectively, possibly
affecting revenue and
applicable products meeting resulting in higher
long-term growth.
volatile organic compound risk premiums
(VOC) emissions and Other impacts: • Environmental and social
content standards. • Reputational impacts, performance of wood and
affecting brand value fiber suppliers, possibly
• Liabilitiesfrom affecting input costs
legal actions or availability
• Repeated product safety • Operating costs from
concerns, influencing supply chain management
risk profile programs that
• R&D expenses to replace
incorporate social and
banned, restricted, environmental factors
or generally harmful
chemicals in products
Product Discussion of efforts to Regulations, sustainability lll

lifecycle manage product lifecycle certifications and customer
environmental impacts and meet demand demand, influencing
impacts for sustainable products. revenues and market share
expansion; opportunities
The weight of end-of-life
to build brand equity
material recovered, and the
and facilitate new sales
percentage of recovered
through product take-
materials that are recycled.
back programs.
Other impacts:
• Operational efficiencies,
such as product and
compliance costs
• R&D and capital
expenditures for
improved product
68 69
CABLE & SATELLITE
SERVICES SECTOR
Environment
# of companies 6 66
Employment 225.1K 40 Human capital Infrastructure Operational energy Operating costs associated l
energy use consumption, the with energy use
Business model and fleet fuel percentage that is grid in operations.
Revenue US$103.4B 43 and innovation consumption electricity, and the
percentage of it that • Virtualization that
is renewable.
reduces energy
0 5 10 15
5-year ROA 3.8% 38 Fleet fuel consumption intensity and number
and percentage of it that of servers, lowering
Industry market beta 0.83 57 is renewable. capital expenditures
and rent payments
State of disclosure Top companies (in Russell 3000)** • Capital expenditures for
% disclosure 77% 58 Comcast Corp. energy-related projects
• Potential energy supply
DISH Network Corp.
% boilerplate 57% 64 disruptions, affecting
Charter Communications Inc. risk profile
*Out of 79 industries EchoStar Corp.
**As of the date of this publication Social capital
Data privacy Discussion of policies Reputational impacts llll

and practices relating to and limits on new
collection, usage, and product development
retention of customer that uses customer data,
The industry distributes television Over three quarters of disclosure information and personally affecting revenues and
programming via cable and satellite examples analyzed for this industry identifiable information. long-term growth.
networks. Besides TV, companies in indicate that companies recognize the The percentage of Other impacts:
the industry also provide consumers materiality of the topics included in users whose customer • Regulatory compliance
with high-speed internet and telephone the Provisional Standard. In line with information is collected for costs and operational
secondary purposes and expenses to ensure privacy
services over the internet (VoIP). Both sector-wide practices, the use of boil-
the percentage who have • Penalties and liabilities
satellite and cable companies compete erplate is the most common (57%). opted in. from customer or
in the same market for delivering televi- Disclosure practices are similar to those regulatory action
The amount of legal
sion content to households, which is the in the Telecommunications industry, with and regulatory fines and
• Exposure of data privacy
violations, affecting
industry’s main market segment. extensive use of boilerplate for the “Data settlements associated with
risk profile
Security” and “Data Privacy” topics. customer privacy.
Sustainability-related risks The number of government
and opportunities Exposure to financial impact or law enforcement
requests for customer
The industry faces several sustainability Public concern and increasing regula-
information and the
related challenges and opportunities tory focus on data privacy and security percentage of those
relating both to physical infrastructure can pose reputational risks, with data resulting in disclosure.
and transmission of user data. As the breaches affecting both costs and long-
industry increasingly provides internet term revenue growth. Additionally,
services, giving companies greater dominant positions by a few players in
access to consumer information, there each market create antitrust and related
is a heightened need for strong data pri- legal risks. Since society increasingly
vacy and security policies. Additionally, relies on internet services, systemic
financial impacts are associated with the disruptions to network infrastructure
environmental footprint of companies’ can affect companies’ social license to
large and expanding network infrastruc- operate and create liabilities. Finally,
ture and fleets, along with potential for managing energy consumption effec-
anti-competitive practices. tively can save costs.
70 71
CAR RENTAL & LEASING
Environment
# of companies 2 77
Data security The number of data security Reputational impacts, lllll Market cap US$5.7B 74 Social capital
breaches, percentage affecting revenues and
of those that involve long-term growth. Human capital
customers’ personally Employment 60.0K 64
Other impacts:
identifiable information. • Regulatory compliance Business model
Discussion of management costs and operational
Leadership
approach to identifying expenses to ensure Net income US$586.0B 66 and governance
and addressing data data security
security risks. • R&D and capital 0 5 10 15
5-year ROA 1.0% 72
expenditures for Industry exposure Market average exposure
technology and Industry market beta 1.96 3

system upgrades
• Penalties and liabilities State of disclosure Top companies (in Russell 3000)**
from customer or % disclosure 100% 1 Hertz Global Holdings Inc.
regulatory action
• High-profile data security Avis Budget Group Inc.
% boilerplate 17% 7
breaches, affecting **As of the date of this publication
risk profile *Out of 79 industries
Managing The Average Interruption System disruptions, lll l

systemic Frequency and Average affecting reputation, brand
risks from Interruption Duration. value, and long-term Industry description State of disclosure
technology growth. Car Rental & Leasing companies rent All companies analyzed disclose infor-
Description of systems to
disruptions
provide unimpeded service. Other impacts: or lease passenger vehicles to customers. mation on the two topics included in
• Contractual liability Car rentals are typically for periods the Provisional Standard. Moreover, in
or claims for damages of less than a month, while leases are for over two thirds of cases, the disclosure
• R&D and capital
a year or more. The industry does not is provided using metrics (67%). Use
expenditures for
technology and include rentals that include a driver, of boilerplate (17%) is low compared
system upgrades but does include car-sharing business with other industries in the sector. The
• Systemic impacts, possibly models in which rentals are measured industry is a top performer across the
affecting risk profile hourly and typically include subscription 79 industries included in the analysis.
fees. This industry does not include cars
Competitive The amount of legal Rulings related to anti- llll leased to purchase or leased to own. Exposure to financial impact
behavior and and regulatory fines and trust, M&A activity, or
open internet settlements associated with open internet, all of which Rising environmental concerns among
anti-competitive practices. affecting market share Sustainability-related risks consumers, reflected in higher environ-
and pricing power if the
Revenue from paid and opportunities mental requirements and standards for
dominant position in key
peering agreements with
markets is challenged. Due to the significant size of rental car auto makers, are creating new innova-
content providers and
fleets, the industry has the ability to tion and business opportunities for the
with other networks and Other impacts:
service providers. • Adverse legal or impact transportation-related emissions. industry. Through innovative service
regulatory rulings related The industry generally manages the offerings that include fuel-efficient fleets,
Average actual sustained
download speed of
to anti-trust or open issue well, as the fleets are, on average, companies can gain competitive advan-
internet, creating liabilities
owned and commercially much newer than owned cars and there- tage and market share. Also, accidents
or one-time expenses
associated content and of • Vulnerability to legal fore more fuel-efficient. Nevertheless, due to poorly maintained or defective
non-associated content.
challenges, influencing offering fuel-efficient and alternative fuel vehicles can impact reputation and lead
Discussion of risks and risk profile vehicles that meet consumer demands to lawsuits.
opportunities associated • Heavy reliance on paid
and lower environmental impacts can
with Open Internet peering arrangements,
Principles and other creating lost revenue create competitive advantages. Ensuring
potential regulation. if regulations restrict passenger safety is another important
these practices factor affecting financial performance.
72 73
CASINOS & GAMING
SERVICES SECTOR
Environment
Customer The percentage of rental Lawsuits related to llll Employment 261.0K 38 Human capital
safety fleet vehicles with overall accidents, leading to
5-star safety rating. liabilities. Business model
The number of Other impacts: Leadership
vehicles recalled. • Operating expenses Net income US$6.3B 39 and governance
to maintain fleet safety
0 5 10 15
• Capital expenditures 5-year ROA 1.5% 66
on safer fleets
• Customer satisfaction Industry market beta 1.32 14
from safety measures,
affecting market share State of disclosure Top companies (in Russell 3000)**
• Efficiency in % disclosure 64% 67 Las Vegas Sands Corp.
fleet utilization,
MGM Resorts International
improving returns % boilerplate 34% 24
• Vehicle recalls, affecting International Game Technology PLC
labor and fleet costs and *Out of 79 industries Caesars Entertainment Corp.
fleet utilization Wynn Resorts Ltd.
• Holding cars for repair,
resale value

The industry operates gambling facilities The industry is characterized by low
Fleet fuel The weighted average Customer demand for lll or platforms, including brick-and-mortar levels of disclosure, with over a third
economy and rental fleet fuel economy. fuel-efficient vehicles and riverboat casinos, online gambling of entries analyzed (36%) categorized
utilization and reputational impacts,
The fleet utilization rate. websites, and racetracks. Publicly held as “No disclosure.” This figure is the
and long-term growth. casinos are a smaller portion of this highest for any industry in the sector
broader industry, which is dominated by and is mainly driven by lack of disclo-
Other impacts:
• Capital expenditures for privately held Native American casinos. sure on topics, such as “Responsible
fleet upgrades The latter sometimes can be managed Gaming” and “Energy Management.”
• Lower depreciation by commercial casino operators or other When available, disclosure on the topics
costs from more
management companies. included in the Provisional Standard is
fuel-efficient fleet
• Higher resale value for generally boilerplate (34%), especially
more fuel-efficient fleet Sustainability-related risks for topics of money laundering and
• Potential regulatory and opportunities smoke-free casinos.
compliance costs
There is much debate about the eco-
in markets with
emissions limits or fuel nomic and societal costs and benefits Exposure to financial impact
economy standards of the industry. While there is growing Public concern about the perceived social
acceptance of gambling as a recreational cost of gambling and regulations can pre-
activity, risks and opportunities include vent casino operators from entering new
promoting responsible gaming and com- markets, highlighting the importance of
plying with anti-money laundering laws promoting responsible gaming. Fines and
and regulations. There is also ongoing settlements associated with money laun-
interest in the transparency around polit- dering or the health impacts of smoking
ical lobbying by the industry. Improving in casinos also impact the balance sheet.
energy efficiency of facilities and equip- Furthermore, energy-intensive opera-
ment, and adapting to the changing tions and volatility in energy prices create
regulatory environment around smoking incentives for the industry to reduce its
in public places, are also important. electricity consumption.
74 75

Energy The total energy Operating costs lll Internal Descriptions of anti- Regulatory or legal action lllll
management consumption, the associated with energy controls money laundering policies for failure to ensure money
percentage use in operations. on money and practices. laundering controls,
that is grid electricity, laundering affecting liabilities.
Other impacts: The amount of legal
and the percentage • Potential disruptions and regulatory fines and Other impacts:
that is renewable.
to operations from settlements associated with • Impact on current and
disruption of energy money laundering. future gaming licenses,
supply, affecting revenues affecting revenues
• Capital expenditures for • Operating expenses for
energy-related projects procedures to prevent
money laundering
Social capital
Political The amount of political Long-term public and ll l
Responsible The percentage of gaming Ability to expand into new lllll spending campaign spending, political support, affecting
gaming facilities implementing markets, gain approval lobbying expenditures, social license to operate
the Responsible for gaming licenses, and and contributions to tax- and intangible assets.
Gambling Index. attract new customers, exempt groups, including
Other impacts:
affecting market share and trade associations. • Regulatory uncertainty,
The percentage
long-term growth. The five largest political, affecting risk profile of
of online gaming
operations implementing Other impacts: lobbying, or tax-exempt industry or company
National Council on • Operating costs to group expenditures. • Liabilities from laws to
Problem Gambling’s implement best practices restrict political influence
Internet Responsible in responsible gaming over gaming licenses
Gambling Standards.
Human capital
Smoke-free The percentage of gaming Ability to attract new ll l

casinos floor where smoking consumers due to
is allowed. non-smoking areas,
The percentage of gaming
market share.
staff that work in areas
where smoking is allowed. Other impacts:
• Smoking bans, affecting
gaming revenue and
market share
• Liabilities from employee
lawsuits due to
smoke-related diseases
76 77
CHEMICALS

Environment
Social capital
Business model
Leadership
0 5 10 15
5-year ROA 6.5% 12

% disclosure 80% 47 Dow Chemical Co.
LyondellBasell Industries NV
EI du Pont de Nemours & Co.
*Out of 79 industries PPG Industries Inc.
Monsanto Co.
Industry description in the Provisional Standard; however,

The Chemicals industry transforms the use of boilerplate language is
organic and inorganic feedstocks into used in over a third of records (36%).
diverse products with a range of indus- Company-tailored narrative (21%) and
trial, pharmaceutical, agricultural, metrics (23%) are also common in the
housing, automotive, and consumer industry, in particular for environmen-
applications. The industry is commonly tal topics, such as “Hazardous Waste
segmented into basic (commodity) Management” and “Energy & Feedstock
chemicals, agricultural chemicals, and Management,” as well as innovation-
specialty chemicals. focused topics, such as “Product Design
& Use-Phase Efficiency.”
Sustainability-related risks
The industry’s products have enabled Chemicals production involves heavy
societal advancements, including use of natural capital inputs, such as
improved energy efficiency, agricultural energy, water, and hydrocarbon feed-
productivity, and myriad other benefits. stock, which account for a significant
However, increased demand for con- share of operating costs. Environmental
sumer goods, and chemical production, regulations and increasing resource
places greater pressure on limited nat- constraints could lead to higher costs or
ural resources. Further, concern over unstable supplies of these resources. At
the possible human health impacts of the same time, growing concerns about
chemical substances in products contin- exposure to and impacts of chemicals
ues to be an industry-wide challenge. are driving shifts in demand and more
stringent regulations that might affect
State of disclosure production. In addition, strong safety
Most companies analyzed disclose management can reduce the risk of
information on the topics included costly accidents.
79

Environment Water The total water Production disruptions lll l

management withdrawn, the percentage that result from water
Greenhouse gas Gross global Scope 1 Efforts to reduce and report lll l that is from constraints
emissions emissions, and the emissions, as well as the water-stressed regions, and in water-stressed areas
percentage covered under direct price on carbon, the percentage and/or inadequate
a regulatory program. affecting operating and that is recycled. wastewater treatment,
capital expenditures. affecting revenues and/or
Description of long- and The number of incidents of
risk premiums.
short-term strategy or Other impacts: non-compliance with water
plan to manage Scope 1 • Emissions reduction, quality permits, standards, Other impacts:
emissions, emission- possibly improving and regulations. • Operating costs associated
reduction targets, and an operational efficiency with water use and/or
analysis of performance and generating net wastewater treatment
against those targets. cost savings • Value of water rights,
• Emissions reduction affecting intangible assets
efforts, possibly lowering • Capital expenditures
business uncertainty and to meet regulatory
risk premiums requirements and install
• Revenue opportunity from more efficient systems
sale of carbon credits • Regulatory penalties and
• Potential impact on compliance costs
or expanding facilities Hazardous The amount of hazardous Operational efficiency and ll ll
waste waste and the percentage cost structure impacts
Air quality Air emissions for the Operational efficiencies, ll l management of waste that is recycled. from using and disposing
following pollutants: NOX leading to a lower cost hazardous waste.
(excluding N2O), SOX, volatile structure over time. Other impacts:
organic compounds, and • Regulatory penalties,
Other impacts:
hazardous air pollutants. • Permit delays remediation liabilities, and
The number of production and/or revocations, compliance costs
facilities in or near areas of affecting production • Perceived operational risk,
dense population. • Regulatory penalties and affecting cost of capital
compliance costs • Capital expenditures for
• Capital expenditures handling hazardous materials
to install best-in-class
control technology Business model and innovation
• Liabilities due to legal
challenges from the local Safety and The percentage of products Shift in demand towards lllll
population, businesses, environmental that contain Registration, products with lower
or regulators stewardship Evaluation, Authorisation impacts and regulatory
of chemicals and Restriction of Chemical bans on certain products,
Energy and Total energy consumed, Operating costs associated l l and genetically (REACH) substances of very affecting revenue and
feedstock the percentage that with energy and feedstock modified high concern (SVHC). long-term growth.
management is grid electricity, and use in manufacturing. organisms
The percentage of products Other impacts:
the percentage that
Other impacts: that contain Class I World • Recalls and regulatory
is renewable. • Capital expenditures for Health Organization (WHO) penalties, creating
The percentage of energy-related projects Acute Toxicity Hazard one-time costs
raw materials from • Hydrocarbon-based Categories pesticides. • Liabilities from
renewable resources. feedstocks and legal actions
Discussion of strategy to • Products with higher
dependence on grid
manage chemicals of concern
power (in certain exposure to regulatory
and develop alternatives
locations), possibly action or demand risks,
with reduced human and/or
affecting risk profile resulting in higher
environmental impact.
company risk premium
The percentage of products by • R&D expenses for less
revenue that contain GMOs. harmful products
80 81
COAL OPERATIONS
NON-RENEWABLE RESOURCES SECTOR
Environment
# of companies 2 77
Product design The revenue from products Increasing demand for lll l Market cap US$4.1B 76 Social capital
for use-phase designed for use-phase products that enhance
efficiency resource efficiency. energy efficiency or Human capital
environmental sustainability Employment 6.4K 76
of customers, affecting Business model
market share and Revenue US$4.3B 77 and innovation
brand value. Leadership
Net income (-US$578.2M) 74 and governance
Other impacts:
• R&D and capital 0 5 10 15
5-year ROA 1.5% 65
expenditures for Industry exposure Market average exposure
new products Industry market beta 2.07 2
Leadership and governance State of disclosure Top companies (in Russell 3000)**
% disclosure 95% 13 CONSOL Energy Inc.
Political The amount of political Long-term public and ll l Westmoreland Coal Co.
spending campaign spending, political support, affecting % boilerplate 51% 52
lobbying expenditures, social license to operate **As of the date of this publication
and contributions to tax- and intangible assets. *Out of 79 industries
exempt groups, including
Other impacts:
trade associations. • Regulatory uncertainty,
The five largest political, affecting risk profile of
lobbying, or tax-exempt industry or company
group expenditures. Industry description State of disclosure
The Coal Operations industry includes The industry is characterized by high
Health, Process Safety Incidents Operational risk lllll companies that mine coal and, to a levels of disclosure across most topics
safety, and Count (PSIC), Process Safety perceptions, affecting
emergency Total Incident Rate (PSTIR), cost of capital. lesser extent, those that manufacture included in the Provisional Standard:
management and Process Safety Incident coal products. Mining activity covers only 5% of entries analyzed were cate-
Other impacts:
Severity Rate (PSISR). • Loss of assets and both underground and surface mining, gorized as “No disclosure.” Along with
The number of one-time costs from as well as thermal and metallurgical coal. the Metals & Mining industry, this is
transport incidents. high-magnitude, Typically, U.S. coal mining companies the lowest figure in the sector. Most
low-probability events
Challenges to the Safety • Production downtime
have domestic operations, with some reporting, however, is boilerplate (51%),
Systems indicator rate
or reduced also operating in the Asia-Pacific region. in particular for topics, such as “GHG
(Tier 3).
capacity operations, Emissions” and “Reserves Valuation &
The Total Recordable Injury affecting revenues Sustainability-related risks Capital Expenditures.” Use of metrics for
Rate (TRIR) and fatality rate • Legal or regulatory action,
and opportunities human capital topics, such as labor rela-
for direct employees and resulting in liabilities
contract employees. • Regulatory penalties, As a key input for electricity and steel tions and health and safety, is high.
compliance, and production, coal fuels economic growth;
Discussion of efforts
to assess, monitor, and
corrective action costs however, cleaner sources of energy, Exposure to financial impact
reduce exposure of such as natural gas and solar, are gaining The industry’s resource-intensiveness
affecting ability to
employees and contract
expand operations and traction. The industry has to innovate (e.g., water and energy use) can impact
workers to long-term
attract employees to reduce the environmental impacts operating costs via rising fuel costs and
(chronic) health risks. • Frequent incidents, of its own operations and downstream water scarcity. Further, impacts on the
resulting in lower
activities. Coal mining operations are environment and safety incidents can
workforce productivity
also resource-intensive, and working affect performance through cost of new
conditions for miners can be dangerous. regulations or operational disruptions.
Regulatory action and public expecta- Finally, policy efforts to mitigate climate
tions for environmental performance change can significantly impact demand
and worker health and safety create new and long-term industry growth.
challenges and opportunities for the
industry.
82 83

Environment Waste The number of Loss-of-containment lllll

management impoundments for incidents, affecting
Greenhouse The gross global Scope 1 Efforts to reduce and report l l tailings, categorized by risk premium.
gas emissions emissions and the emissions, as well as the U.S. Mine Safety and
Other impacts:
percentage covered under direct price on carbon, Health Administration • Impacts on permits
a regulatory program. affecting operating and hazard potential.
to acquire and develop
capital expenditures. new assets, limiting
A description of long-
and short-term strategy Other impacts: revenue-earning potential
or plan to manage • Emissions-reduction • Liabilities from legal or
Scope 1 emissions, efforts, lowering regulatory actions due to
emissions reduction business uncertainty improper waste disposal
targets, and an analysis and risk premiums • Increased capital
of performance against expenditures to mitigate
those targets. environmental impacts
Water The total fresh water Production disruptions that ll ll affecting intangible assets
management withdrawn, percentage result from water constraints
that is recycled, and the in water-stressed areas and/ Biodiversity Description of Access to reserves and lllll
percentage in water- or inadequate wastewater impacts environmental management ability to acquire and
stressed regions. treatment, affecting revenues policies and practices for develop new assets,
and/or risk premiums. active sites. affecting growth potential.
non-compliance with water- Other impacts: The percentage of mine Other impacts:
quality permits, standards, • Operating costs associated sites where acid rock • Legal liabilities
and regulations. with water use and/or drainage is predicted to • Regulatory penalties,
wastewater treatment occur, where it is actively remediation, and
• Asset write-downs due to mitigated, and where compliance costs
impacts on ability to operate it is under treatment • Operating and capital
• Value of water rights, or remediation. expenditures for
affecting intangible assets improved environmental
Proven and probable
• Capital expenditures management
reserves in or near sites • Reputational impacts,
to meet regulatory with protected conservation
requirements and install affecting intangible assets
status or endangered
more efficient systems species habitats.
compliance costs
84 85

Social capital Labor relations The percentage of active Production disruptions due lll l
workforce covered under to labor unrest, possibly
Community Discussion of process Project delays due lllll collective bargaining creating cost increases and
relations to manage risks and to permit issues or agreements, for both U.S. production shortfalls that
and rights of opportunities associated community action, creating and foreign employees. lead to lost revenue.
indigenous with community rights additional cost and delayed The number and duration Other impacts:
peoples and interests. revenue. Operational of strikes and lockouts. • Poor labor relations,
disruptions, creating loss creating unanticipated
The number and duration
of revenue. wage and
of non-technical delays.
Other impacts: compensation increases
Proven and probable • Improved productivity
reserves in or near
from strong community Leadership and governance
indigenous land.
relations and shared
value due to community Reserves Sensitivity of coal reserve Adverse impact to l l l
socio-economic benefits valuation levels to future price valuation for coal assets,
• Liabilities from legal and and capital projection scenarios that resulting from regulatory
regulatory actions expenditures account for a price on action to limit greenhouse
• Ability to acquire and carbon emissions. gas emissions.
develop new assets, and
potential for write-downs The estimated carbon Other impacts:
of existing reserves dioxide content emissions • Reduction in demand
• Introduction of more embedded in proven for coal, resulting in an
stringent regulations coal reserves. adverse impact to return
with associated on capital invested
Discussion of how price • Increased cost of
compliance cost and demand for coal
• Higher cost of capital capital due to credit
and/or emissions regulations
due to risk premium rating downgrades
influence the capital
associated with expenditure strategy for
community opposition or exploration, acquisition, and
associated with potential development of assets.
for nationalization
of assets resulting
from increased
governmental oversight
Human capital
Workforce The Mine Safety and Health Operational efficiencies and llll
health, safety, Administration all-incidence, productivity improvements
and well-being fatality, and near-miss from strong worker health
frequency rates. and safety performance.
Discussion of management Other impacts:
of accident and safety risks, • Regulatory penalties and
and long-term health and corrective action costs
safety risks. • Liabilities from
worker litigation
• Reputation and ability
to attract employees
86 87
COMMERCIAL BANKS
FINANCIALS SECTOR

Environment
Social capital
Market cap US$1.14T 4
Business model
Revenue US$456B 7 and innovation
Leadership
0 5 10 15
5-year ROA 0.8% 74

% disclosure 78% 53 Bank of America Corp.
Wells Fargo & Co.
% boilerplate 12% 5
Citigroup Inc.
*Out of 79 industries US Bancorp
PNC Financial Services Group Inc.
Industry description high use of metrics (50%) across several

Companies in the Commercial Banks of the topics included in the Provisional
Industry accept deposits and make Standard. Quantitative information
loans to individuals and corporations. is typically available for governance-
Some firms in this industry are engaged oriented topics, such as “Systemic Risk
in lending for infrastructure, real Management.” Compared to other
estate, and other projects. Note that the industries in the sector, disclosure on the
Commercial Banks standards do not integration of environmental, social, and
include all the activities of integrated governance risks into operations is gen-
financial institutions. erally more tailored to each company’s
circumstances.
Commercial banks provide a range of Recent trends in the regulatory
financial services for individuals and environment indicate a significant shift
corporations, and serve an essential role toward enhanced risk management,
in the functioning of the U.S. and global increased disclosure, and accountability.
economies, facilitating the transfer of Legislation passed in response to the
financial resources to their most pro- 2008 financial crisis demonstrates the
ductive capacity. However, the recent potential for further alignment between
financial crisis and subsequent regula- the interests of society and those of long-
tory developments demonstrate how term investors. As investors increasingly
non-financial forms of capital contribute demand the effective management of
to market value. sustainability risks and opportunities,
firms that are able to address all forms of
State of disclosure capital – not just financial – will be better
Disclosure practices by the companies positioned to protect shareholder value.
analyzed are characterized by a relatively
89

Social capital Business model and innovation
Financial The percentage of new Expansion of services to l lll Integration of Discussions of how Impact of ESG factors l lll
inclusion accounts held by first-time new customers, driving environmental, environmental, social, and on borrowers, affecting
and capacity account holders. revenue growth and social, and governance (ESG) factors interest income from loans
building market share. governance are integrated into the and leases.
The percentage of
risk factors lending process.
total domestic loans Other impacts: Other impacts:
in credit risk
for underserved • Managing loan portfolio Discussions of credit risk to • Write-down of collateral
analysis
and underbanked risk and improving the loan portfolio presented and loan value
business segments. financial literacy, by climate change, natural • Lower ability to repay
increasing interest resource constraints, human debt over time, affecting
The number of participants
income, lowering credit rights concerns, or other cost of capital
in financial literacy
risks, and reducing the broad sustainability trends. • Reputational impacts,
initiatives for unbanked,
cost of capital affecting intangible assets
underbanked, or The amount and percentage
• Operating expenses and long-term growth
underserved customers. of lending and project
to implement financial
finance that employs:
The loan-to-deposit ratio inclusion and capacity
integration of ESG factors;
for overall domestic building programs
sustainability-themed
lending and underserved • Reputational impacts,
lending or finance;
and underbanked affecting intangible assets
screening (exclusionary,
business segments. and long-term growth
inclusionary, or
The loan default rates benchmarked); and
for overall domestic community lending
lending and underserved or finance.
and underbanked
The total loans to
business segments.
companies in the following
sectors/industries:
Customer The number of data Reputational impacts, llll Energy/Oil & Gas,
privacy and security breaches, and ability to combat Materials/Basic Materials,
data security percentage involving cyberattacks, and limits Industrials, and Utilities.
customers’ personally on use of customer data,
identifiable information. affecting market share and
long-term growth.
Discussion of management
approach to identifying and Other impacts: Management The amount of legal Non-compliance that llll
addressing vulnerabilities • Loss of assets from of the legal and regulatory fines and creates potential restrictions
and threats to data security. consumers switching and regulatory settlements associated with on specific business
to competitors environment financial industry regulation, activities, affecting market
• Penalties and liabilities and the percentage share and revenue growth.
from customer or that resulted from
regulatory action Other impacts:
whistleblowing actions. • Liabilities
• Regulatory compliance from legal and
costs and operational The number of inquiries, regulatory actions
expenses to ensure privacy complaints, or issues • Regulatory penalties and
and security received by the legal and compliance costs

• Exposure of data privacy compliance office through • Reputational impacts,
violations or high profile an internal monitoring affecting intangible assets

data security breaches, or reporting system, • Exposure to regulatory
affecting risk premium and percentage that actions and restrictions,

• Capital expenditures were substantiated. affecting risk premium
for technology and
system upgrades
90 91
CONSTRUCTION MATERIALS
Environment
Systemic risk The results of stress tests Quality, transparency, and lllll Market cap US$62.4B 54 Social capital
management under adverse economic consistency of a firm’s
scenarios, including the capital base, or regulatory Human capital
following measures (actual uncertainty, affecting cost Employment 77.2K 61
and projection): loan losses; of capital. Business model
losses, revenue, and net Revenue US$35.0B 59 and innovation
Other impacts:
income before taxes; Tier 1 • Ability to absorb shocks
Leadership
common capital ratio; Tier 1 Net income US$2.1B 53 and governance
from financial and
capital ratio; total risk-based 0 5 10 15
economic stress, affecting 5-year ROA 2.0% 64
capital ratio; and Tier 1 Industry exposure Market average exposure
asset value
leverage ratio. • Impact of liquidity ratios Industry market beta 0.96 46
The Basel III Liquidity on operational efficiency
Coverage Ratio (LCR). and profitability State of disclosure Top companies (in Russell 3000)**
The Net exposure to written % disclosure 77% 58 Owens Corning
affecting license
credit derivatives. MDU Resources Group Inc.
to operate and % boilerplate 33% 23
Total value of Level 3 long-term growth USG Corp.
assets and their percentage *Out of 79 industries Carlisle Cos Inc.
relative to total assets. Martin Marietta Materials Inc.
The skewness and kurtosis **As of the date of this publication
of trading revenue.

The Construction Materials industry Most companies analyzed disclose infor-
includes companies that mine, pro- mation on several of the topics included
cess, and produce materials, including in the Provisional Standard. While a
cement and its aggregates, ready-mix third of disclosure is provided using
concrete, asphalt, sand, gravel, and boilerplate language (33%), the use of
other construction products used in metrics (24%) is also common, in partic-
buildings. Construction materials are ular for the “Workforce Health, Safety &
an essential input to the development of Well-being” topic. Environmental risks
the commercial, residential, transporta- stemming from “GHG emissions,” “Air
tion, and industrial infrastructure that Quality,” and “Energy Management” are
drives economic growth. often described using boilerplate. Only a
few companies provide disclosure on the
Sustainability-related risks topic of “Water Management.”
and opportunities
Global threats (such as climate change, Exposure to financial impact
water scarcity, and resource con- Construction Materials companies use
straints), and public concern about natural capital inputs that can lead to
these threats, are intensifying globally. higher costs due to environmental pres-
The industry is resource-intensive and sures such as climate change and water
its management of common capitals scarcity. Industry activity can generate
(such as energy, water, and land), as negative environmental externalities,
well as negative externalities (such as potentially resulting in new regulation
greenhouse gas emissions and water that may increase operating costs.
pollution and other factors), are key in Companies depend on a license to oper-
creating value. ate from employees and communities,
and thus adverse impacts to human lives
may disrupt this license.
92 93

Environment Water The total freshwater Production disruptions lll l

management withdrawn, the percentage resulting from water
Greenhouse The gross global Scope 1 Efforts to reduce and report ll l that was recycled, and constraints in water-stressed
gas emissions emissions and the emissions, as well as the percentage that is from areas, affecting revenues
percentage covered under direct price on carbon, water-stressed regions. and/or risk premiums.
a regulatory program. affecting operating and Other impacts:
capital expenditures. • Operating costs associated
Description of long- and
short-term strategy to Other impacts: with water use
manage Scope 1 emissions, • Emissions-reduction, • Value of water rights,
emissions reduction possibly improving affecting intangible assets
targets, and an analysis operational efficiency • Capital expenditures
of performance against and generating net to install more
those targets. cost savings efficient systems
• Emissions-reduction, • Regulatory penalties and
possibly lowering compliance costs
business uncertainty • Reputational impacts,
and risk premiums affecting license
• Revenue opportunity from to operate
sale of carbon credits
• Potential impact on Waste The amount of waste Operational efficiency and lll
permits for setting up or management from operations, the cost structure impacts from
expanding facilities percentage that is recycled, waste handling.
Other impacts:
Air quality Air emissions for the Operational efficiencies, ll l hazardous. • Regulatory penalties,
following pollutants: NOX leading to a lower cost remediation liabilities, and
(excluding N2O), SOX, structure over time. compliance costs
particulate matter (PM), • Capital expenditures for
Other impacts:
dioxins/furans, volatile • Permitting delays handling hazardous waste
organic compounds
and/or revocations and
(VOCs), polycyclic aromatic
hydrocarbons (PAHs), and
regulatory penalties Biodiversity Description of Access to reserves and llll
• Capital expenditures impacts environmental management ability to acquire and
heavy metals.
to install best-in-class policies and practices for develop new assets,
technology active sites. affecting long-term growth.
• Legal liabilities
Terrestrial acreage disturbed Other impacts:
and the percentage of • Regulatory penalties,
Energy The total energy consumed; Operating costs l l impacted area restored. remediation, and
management and the percentage associated with energy compliance costs
that was from purchased use in production. • Liabilities from
electricity, alternative legal actions
Other impacts:
sources, or renewable • Capital • Operating and capital
expenditures for
sources. expenditures for
• Energy supply risk, improved environmental
affecting cost of capital management
94 95
CONSUMER FINANCE
FINANCIALS SECTOR
Environment
Human capital Social capital
Workforce Total Recordable Injury Operational efficiencies and lll Employment 397.1K 32 Human capital
health, safety, Rate (TRIR), and Near Miss productivity improvements
and well-being Frequency Rate for full-time from strong worker health Business model
employees and contractors. and safety performance. Revenue US$203.3B 22 and innovation
Leadership
The number of reported Other impacts: Net income US$31.9B 8 and governance
cases of silicosis. • Regulatory penalties and
0 5 10 15
corrective action costs 5-year ROA 2.2% 61
• Liabilities from Industry exposure Market average exposure
worker litigation Industry market beta 0.92 49

to attract employees State of disclosure Top companies (in Russell 3000)**
% disclosure 89% 24 American Express Co.
Business model and innovation Capital One Financial Corp.
Visa Inc.
Product The percentage of Customer demand lll l *Out of 79 industries Synchrony Financial
innovation products that can be used and regulatory action,
for credits in sustainable affecting market share First Data Corp.
building design and and pricing power. **As of the date of this publication
construction certifications.
Other impacts:
Total addressable market • R&D and capital
and share of market expenditures for Industry description information, lending is done responsibly,
for products that reduce new products Companies in the Consumer Finance and customer privacy is protected.
energy, water, and/or
Industry provide personal finance
material impacts during
use and/or production. through credit and debit card products. State of disclosure
Certain companies within this industry Disclosure by the companies analyzed is
Leadership and governance provide transaction processing and characterized by a relatively high use of
payment technology for debit and credit metrics (43%) across most of the topics
Pricing The amount of legal Violations of competition lllll cards. Note that the Consumer Finance included in the Provisional Standard.
integrity and and regulatory fines and regulations, leading to fines
transparency settlements associated with and penalties. standards do not include all the activities Metrics and company-tailored narrative
cartel activities, price fixing, of integrated financial institutions. are generally used to provide informa-
Other impacts:
and anti-trust activities. • Reputational impacts, tion on the “Responsible Lending & Debt
affecting market share Sustainability-related risks Prevention” and “Customer Privacy &
• Increased regulatory and opportunities Data Security” topics. Only some compa-
scrutiny, impacting
The extension of credit and other con- nies provide disclosure to the “Financial
ability to raise prices
• Record of sumer finance services is essential to Inclusion” topic.
non-compliance, the functioning of the U.S. and global
resulting in higher economies. Although traditional value Exposure to financial impact
risk premium
drivers will continue to impact indus- Recent regulatory focus on consumer
try performance, the recent financial protection and transparency has and
crisis and the subsequent regulatory will continue to align the interests of
developments have articulated how society with those of long-term investors.
social capital contributes to financial Companies will, therefore, not be able to
performance. Companies in this industry maximize financial capital unless social
have the opportunity to create social capital is managed effectively. Firms that
value through inclusion and capacity are able to navigate new regulations will
building, and must also work to ensure be better positioned to expand their busi-
that customers are receiving transparent ness and protect shareholder value in the
long term.
96 97

Social capital Responsible For customers with FICO Impact on default rates l l l
lending scores above and below and interest income,
Financial The revenue from credit Expansion of access to a l l l and debt 640 (subprime): average affecting revenues.
inclusion and debit products broader market through prevention customer debt, average
Other impacts:
targeting unbanked and new products and APR, mean and median age • Riskiness of loan portfolio,
underbanked segments. technologies, driving service of accounts, and average
fees and data processing monthly full payment rate. • Asset write-downs from
The percentage of new
revenue. The percentage of bad debt accumulation
accounts held by first-time
credit card holders. Other impacts: applications accepted • Reputational
• Reputational impacts, for applicants with FICO impacts, affecting
affecting intangible assets scores above and below long-term growth
and long-term growth 640 (subprime).
• Operating expenses
The average annual fees
to implement financial per account for pre-paid
inclusion services transaction products.
Customer The number of data Market share and long- lllll
privacy and security breaches and term growth are affected by
data security percentage involving reputational impacts,
customers’ personally ability to combat
identifiable information. cyberattacks, and limits on
customer data use.
The amount of fraudulent
transaction activity, the Other impacts:
percentage from • Remediation costs,
card-not-present fraud, penalties, and liabilities
and card-present and from customer or
other fraud. regulatory action
• Regulatory compliance
Description of data security
costs and operational
and fraud prevention
expenses to ensure privacy
efforts related to new and
and security
emerging technologies • Exposure of data privacy
and/or new and
violations or high-profile
emerging threats.
data security breaches,
affecting risk premium
for technology and
system upgrades
Transparent The amount of legal Reputational impacts, lllll

information and regulatory fines and affecting ability to retain
and fair advice settlements associated with and attract customers and
for customers disclosure, transparency, thereby revenue and market
or marketing. share associated with fees
and interest.
The payout ratio for
add-on products. Other impacts:
• Liabilities
from legal and
regulatory actions
• Regulatory penalties,
compliance- and
corrective action costs
98 99
CONTAINERS & PACKAGING
Environment
Employment 419.2K 27 Human capital Greenhouse gas Gross global Scope Efforts to reduce and report l l
emissions 1 emissions and the emissions, as well as the
Business model percentage of emissions direct price on carbon,
Revenue US$135.5B 35 and innovation covered under a affecting operating and
Leadership regulatory program. capital expenditures.
Description of long- and Other impacts:
0 5 10 15
5-year ROA 5.3% 26 short-term strategy or • Emissions reduction,
plan to manage Scope 1 possibly improving
Industry market beta 0.90 52 emissions, including operational efficiency
emissions reduction and generating net cost
State of disclosure Top companies (in Russell 3000)** targets, and an analysis savings
% disclosure 96% 10 3M Co. of performance against • Emissions reduction
those targets. efforts, possibly lowering
International Paper Co.
% boilerplate 46% 43 business uncertainty and
WestRock Co. risk premiums
*Out of 79 industries Crown Holdings Inc. • Revenue opportunity from
Ball Corp. sale of carbon credits
permits for setting up or
expanding facilities
Industry description State of disclosure Air quality Air emissions for the Operational efficiencies, l l
The industry manufactures a wide The industry has high levels of disclo- following pollutants: NOx leading to a lower cost
range of products, including corrugated sure across all topics in the Provisional (excluding N2O), SOx, structure over time.
cardboard packaging, food and beverage Standard: only 4% of records analyzed particulate matter, and
Other impacts:
volatile organic compounds.
containers, bottles, aluminum cans, steel were labeled as “No disclosure.” This is • Regulatory penalties and
drums, and other forms of packaging. the lowest figure in the sector. However, compliance costs, possibly
influenced by the extent
Collectively, the glass, metal, plastic, and boilerplate language is widely used of biomass used as a
paper containers segments share similar (46%), in particular for topics, such as source of on-site energy
hurdles and business characteristics. “GHG Emissions,” “Product Safety,” and • Capital expenditures
“Materials Sourcing.” Use of metrics is to install best-in-class

control technology
Sustainability-related risks relatively high for certain topics, includ- • Permit delays
and opportunities ing “Energy Management” and “Product and/or revocations,
There are rising concerns for social and Lifecycle Management.” affecting production
environmental risks in containers and
packaging lifecycles. During manufac- Exposure to financial impact
turing, impacts can arise from GHG and Materials sourcing is a significant cost
Energy Total energy consumed, Operating costs l l
management the percentage that associated with energy use
other air emissions, water pollution, for the industry and is associated with is grid electricity, and in manufacturing.
and waste generation. In the use phase environmental and social impacts in the percentage that
Other impacts:
is renewable.
and at end-of-life, products come into the supply chain, resulting in reputa- • Capital
expenditures for
contact with people and consumables, tional and pricing risks. Similarly, the energy-related projects
raising the prospect of adverse health design, manufacturing, and end-of-life
impacts. Another concern is packaging treatment of products can create envi-
that remains in the environment at ronmental and health impacts. As a
a product’s end-of-life. These trends result, companies are under increasing
drive innovation, with a focus on safer customer and regulatory pressure to
materials, enhanced recyclability, and limit such impacts, which has the poten-
sustainably-sourced raw materials. tial to influence costs and revenues.
100 101

Water Total water withdrawn, the Production disruptions ll l Social capital

management percentage that is from that result from water
water-stressed regions, and constraints in water-stressed Product safety Number of recalls and total Reputational impacts and lllll
percentage that is recycled. areas, and/or inadequate units recalled. regulatory bans on use
wastewater treatment, of certain substances in
Number of incidents of Discussion of process
affecting revenues and/or products, affecting revenue
non-compliance with water to identify and manage
risk premiums. and long-term growth.
quality permits, standards, emerging materials and
and regulations. Other impacts: chemicals of concern. Other impacts:
• Operating costs associated • Product recalls, creating
with water use and/or one-time costs
wastewater treatment • Products with higher
• Value of water rights, exposure to regulatory
affecting intangible assets action or demand risks
• Capital expenditures or those failing to obtain
to meet regulatory product certification,
requirements and install resulting in higher
more efficient systems company risk premium
• Regulatory penalties and • R&D expenses to develop
compliance costs safer products
Waste Amount of total waste Operational efficiency and l l legal actions
management from manufacturing, cost structure impacts from
the percentage of waste waste handling. Business model and innovation
that is recycled, and the
Other impacts:
percentage of waste that is • Regulatory penalties, Product The percentage of raw Regulations and customer lll l
hazardous. lifecycle materials from recycled demand, influencing
remediation liabilities, and
compliance costs management content, and percentage revenues and market
• Capital expenditures for from renewable resources. share expansion.
handling hazardous waste Revenue from products Other impacts:
that are reusable, recyclable, • Operational efficiencies,
and/or compostable. such as product and
Description of strategies to
reduce the environmental • Regulatory penalties and
impact of packaging
compliance costs
throughout its lifecycle. • R&D and capital
expenditures for
improved product
Materials Total wood fiber purchased Reputational impacts and lll l

sourcing and the percentage that is rising customer demand
from certified sources. for certified products,
Total aluminum purchased
long-term growth.
from certified sources. Other impacts:
• Environmental and social
performance of suppliers,
possibly affecting input
costs or availability.
102 103
CRUISE LINES
SERVICES SECTOR
Environment
# of companies 4 71
Employment 173.0K 48 Human capital Fuel use and Gross global Scope 1 Operating costs associated l l
air emissions emissions. with fuel use.
Business model
Revenue US$28.6B 63 and innovation Descriptions of long- and Other impacts:
Leadership short-term strategy or • Capital expenditures for
Net income US$2.9B 49 and governance plan to manage Scope 1 new technology and
emissions, emissions- fleet modifications to
0 5 10 15
Industry market beta 0.97 44 against those targets. • Regulatory penalties
and compliance costs
State of disclosure Top companies (in Russell 3000)** The total energy consumed,
associated with emissions
the percentage that is • Operational risks from
% disclosure 100% 1 Carnival Corp. from heavy fuel oil, the
relying on specific
Royal Caribbean Cruises Ltd. percentage from onshore
% boilerplate 20% 10 fuel types, impacting
Norwegian Cruise Line Holdings Ltd. power supply (OPS), and
risk premiums
*Out of 79 industries the percentage that is
**As of the date of this publication from renewables.
Air emissions for the
following pollutants: NOX,
SOX, and particulate matter.
Industry description State of disclosure The average Energy
The Cruise Lines industry comprises All companies in the industry disclose Efficiency Design Index
for new ships.
companies that provide passenger information on all the topics included
transportation and leisure entertain- in the Provisional Standard. Moreover, Discharge The amount of ship Violations of environmental lll
ment, including deep sea and river in most cases such disclosure is pro- management waste discharged to regulations, in particular
cruises. Cruises aim to provide a luxury vided using an equal mix of metrics and and ecological the environment and those related to ballast
impacts percentage of it treated water, leading to fines and
resort experience for passengers, typ- tailored narrative (both 40%). Use of prior to discharge. penalties.
ically in exotic and pristine locations. boilerplate (20%) is low compared with
The percentage of fleet Other impacts:
North America is the dominant market other industries in the sector and the implementing ballast water • Reputational impacts,
for the industry, with the most popu- Marine Transportation industry. All exchange and percentage affecting brand value
lar destinations being the Caribbean companies provide metrics for the “Fuel implementing ballast • Regulatory bans on
and Europe. Use & Air Emissions” topic. The industry water treatment. operating in certain
ports or routes,
is a top performer across the 79 indus- Cruise duration in
Sustainability-related risks tries included in the analysis. marine-protected areas
long-term growth
and areas of protected
and opportunities conservation status.
• Operating expenditures
As the single fastest-growing segment Exposure to financial impact for ballast, bilge, and
The number of notices waste water management
of the tourism sector, the environmental Global regulations are focusing on of violations received • Capital expenditures to
and social impacts of the industry are addressing emissions and waste dis- for dumping. install new technology
also growing. Ensuring high labor stand- charge, creating potential costs and
ards is important due to the intensity of affecting port access for cruise operators.
crew work and the network of labor laws Management of working conditions
governing cruise lines. Furthermore, the is important due to the complex and
ecosystems that the industry depends varying regulations and customer-
upon are sensitive and can be threatened facing nature of the industry. Accidents
by the industry’s emissions and effluents. and small instances of onboard crime,
Accidents in the industry, though rare, assault, and injuries can create liabilities
can lead to social and environmental and reputational harm.
costs as well.
104 105

Social capital Leadership and governance
Shipboard The number of alleged Regulatory or legal actions llll Accident The number of Poor safety records, lllll
health crime incidents involving due to safety violations, management Conditions of Class or affecting cost of capital.
and safety passengers or employees. affecting liabilities. Recommendations.
Other impacts:
management
The fleet average Other impacts: The number of port state • Liabilities from regulatory
CDC Vessel Sanitation • Reputational impacts, control deficiencies and and legal actions
Program inspection affecting brand value and number of detentions. • Regulatory penalties and
score and percentage market share remediation costs
The number of accidents
of inspections failed. • Regulatory penalties and • Lost revenue due
and incidents.
remediation costs to detention at
The number of serious • Capital expenditures on port following
injuries per million
ship maintenance and safety inspections
customers and number
system upgrades • Loss of assets and
of voyages with a
one-time costs from
gastrointestinal illness
high-magnitude, low-
count exceeding 2%.
probability events
The seafarer lost time • Operating costs related
injury rate. to safety standards
Human capital equipment upgrades
• Reputational
Fair labor The average hourly wage Cost structure impacts l l impacts, affecting
practices for seafarers, by region. from regulatory pressure long-term growth
to improve wages and
The percentage of seafarers
working conditions.
working maximum hours.
Other impacts:
The percentage of seafarers • Liabilitiesfrom
paid for overtime.
employee lawsuits
The amount of legal • Regulatory penalties and
and regulatory fines and corrective actions costs
settlements associated • Operational efficiencies
with labor law violations. and productivity
improvements from
strong labor standards
and lower turnover
106 107
DRUG RETAILERS &
CONVENIENCE STORES
Environment
# of companies 5 69
Employment 472.7K 24 Human capital Energy Total energy consumption, Operating costs l
Business model in retail is grid electricity, and use in operations.
Revenue US$302.5B 16 and innovation the percentage that is
renewable. • Reputational impacts
and lower costs passed
0 5 10 15
5-year ROA 5.3% 25 to customers, affecting
market share
Industry market beta 0.78 59 • Capital expenditures for
% disclosure 76% 60 CVS Health Corp. Social capital
Walgreens Boots Alliance Inc.
Rite Aid Corp. Data security Discussions of policies Reputational impacts, lllll
and privacy and practices to secure and ability to combat
*Out of 79 industries CST Brands Inc.
customers’ protected cyberattacks and
Casey’s General Stores Inc. health information (PHI) ensure data privacy,
**As of the date of this publication records and other personally affecting revenues and
identifiable information (PII). long-term growth.
The number of data Other impacts:
Industry description State of disclosure security breaches, the • Remediation costs,
Companies operate owned or franchised Over three quarters of disclosure percentage of breaches penalties, and liabilities
involving only customers’ from customer or
retail pharmacies, convenience stores, examples analyzed indicate that com-
PII and percentage involving regulatory action
or distribution centers. Consumer sales panies recognize the materiality of customers’ PHI, and the • Capital expenditures
of prescription and over-the-counter the topics in the Provisional Standard. number of customers for technology and
pharmaceuticals account for a majority However, the use of boilerplate is affected in each category. system upgrades
of revenues. Stores also sell household common (52%) in reporting on top- The amount of legal
and personal care products, and a limited ics, such as “Data Security & Privacy” and regulatory fines and
expenses to ensure
selection of groceries. Some companies and “Management of Controlled data security
data security and privacy.
are expanding by offering clinics at vari- Substances.” Disclosure on “Patient • High-profile data security
breaches, affecting
ous retail locations. Health Outcomes” is relatively better
risk profile
than other topics.
Sustainability-related risks Management The percentage of Violations of controlled ll l
and opportunities Exposure to financial impact of controlled controlled substance substance regulations,
The industry provides consumers with Ensuring customer data security and substances prescriptions dispensed leading to regulatory fines
where a prescription drug and penalties.
health services, such as medication and privacy mitigates legal and regulatory monitoring program (PDMP)
basic healthcare information. Risks penalties. Furthermore, rising abuse Other impacts:
database was queried. • Loss of regulatory licenses
and opportunities center on social issues, rates of controlled substances expose The amount of legal to sell controlled products,
such as the misuse of controlled sub- the industry to regulatory risks and and regulatory fines and affecting revenues
stances and overall patient health. Also, costs stemming from the loss, theft, settlements associated with • Significant violations
the industry collects and processes a or excessive prescription of controlled controlled substances. or poor track record of
managing controlled
large amount of personal health informa- substances from retail or distribution substances, affecting
tion that, if mishandled or inadequately locations. Lastly, ensuring the highest risk profile
protected, can result in significant rep- quality services can strengthen compa- • Regulatory compliance
utational damage. Finally, drug quality nies’ social license to operate. costs
and safety is key for the industry, includ-
ing managing the risk of compromised
drugs in the supply chain.
108 109
E-COMMERCE
Environment
Patient health The first fill adherence rate. Successful efforts to lllll Market cap US$402.5B 23 Social capital
outcomes improve patients’
Description of policies
adherence to medications Human capital
and practices to Employment 261.8K 37
and refill rates (including
prevent prescription
a well-trained, diverse Business model
dispensing errors. Revenue US$123.9B 38 and innovation
workforce), affecting sales
The amount of legal and market share. Leadership
and regulatory fines and Net income US$2.1B 52 and governance
Other impacts:
settlements associated • Legal liabilities due to 0 5 10 15
with prescription 5-year ROA 3.0% 51
drug-dispensing errors Industry exposure Market average exposure
dispensing errors. • Reputational impacts Industry market beta 1.13 31
The percentage of from persistent dispensing
gender and racial/ethnic errors, affecting State of disclosure Top companies (in Russell 3000)**
group representation long-term growth % disclosure 66% 66 Amazon.com Inc.
for pharmacists. • Significant dispensing
errors, affecting eBay Inc.
risk profile Wayfair Inc.
• Operating expenses *Out of 79 industries Overstock.com Inc.
related to efforts to Lands’ End Inc.
improve adherence rates
and ensure a well-trained **As of the date of this publication
workforce that reflects
customer demographics
Leadership and governance E-commerce companies provide an There are low levels of disclosure for
online marketplace for other firms or some topics (e.g., energy, water, pack-
Drug supply Discussion of efforts to Reputational impacts from llll individuals to sell their goods and ser- aging efficiency) and high levels of
chain reduce the occurrence of compromised products,
integrity compromised drugs within affecting demand and vices, or are retailers and wholesalers disclosure for others (e.g., data privacy
the supply chain. market share. that provide an exclusively web-based and security). When available, most
The number of drug recalls, Other impacts: platform for consumers to buy information is boilerplate (58%).
total units recalled, and • Products unavailable for their goods. This figure is the highest for any retail-
the percentage recalled for sale due to product recalls oriented industry and it is also the
private-label products. or lack of alternatives, Sustainability-related risks highest in the sector.
creating lost revenues
• Operating cost impacts and opportunities
from switching sources of E-commerce provides consumers with Exposure to financial impact
crucial drugs convenient access to goods and ser- Reliance on human capital, and to some
vices. However, the rapid growth of this extent natural capital, affects companies
product liability claims
• Capital expenditures for industry has created some sustainabil- primarily through revenue growth or
track-and-trace systems ity challenges, such as rising concerns cost impacts. For example, data privacy
• Operational efficiency over the use and security of consumer and security are important to protect
and cost structure data, energy and water use from the brand and avoid costs; expected energy
impacts from supply
chain traceability growing presence of data centers and and water price increases and supply
logistics operations, and a shortage of constraints, as well as regulations, can
qualified workers. increase costs in the absence of logistical,
packaging, and data center efficiencies;
and a diverse workforce contributes
to innovation, customer empathy, and
revenue growth.
110 111

Environment Social capital
Energy The total energy Operating costs associated l l Data security Discussion of management Reputational impacts lllll
and water consumption, the with energy and water use and fraud approach to identifying and ability to combat
footprint of percentage that is in data centers. protection and addressing data cyberattacks, affecting
hardware grid electricity, and security risks. revenues and
Other impacts:
infrastructure the percentage that is long-term growth.
• Reputational impacts, The number of data security
renewable energy.
affecting brand value breaches, the percentage Other impacts:
The total water withdrawn and customer acquisition that involves customers’ • Operating expenses for
and total water consumed, and retention personally identifiable transaction losses associated
and the percentage of each • Virtualization that information, and the with credit card fraud
in water-stressed regions. reduces energy number of customers • R&D and capital
intensity and number affected. expenditures for technology
Descriptions of the
of servers, lowering and system upgrades
integration of environmental • Regulatory compliance costs
capital expenditures and
considerations into
rent payments and operational expenses to
strategic planning for data • Capital expenditures ensure data security
center needs. • Remediation costs, penalties,
for energy- or
water-related projects and liabilities from customer
or regulatory action
Logistics and The total greenhouse Operational efficiencies lll l • High profile data security
packaging gas (GHG) footprint of from optimizing materials breaches, affecting
efficiency product shipments. usage and logistics, risk profile
affecting cost structure.
Description of strategies to
reduce the environmental Other impacts:
Data privacy The percentage of Reputational impacts and llll
users whose customer limits on use of customer
impact of product delivery. • Reputational impacts,
information is collected for data, affecting revenues and
secondary purposes and the long-term growth.
to customers, affecting
percentage of those who
market share Other impacts:
have opted in. • Regulatory
• Fuel cost risks and inability compliance costs
to maintain low shipping Discussion of policies and operational expenses to
costs, possibly influencing and practices relating to ensure privacy
risk premium behavioral advertising and • Remediation costs, penalties,
• Capital expenditures customer privacy. and liabilities from customer
for fuel-efficient or regulatory action
logistics fleets • Exposure of data privacy
risk profile
Human capital
Employee Percentage of Increased ability to cater lll

recruitment, employee engagement. to a diverse customer base
inclusion, and and stronger innovation
The voluntary and involuntary
performance potential, affecting market
employee turnover rate.
share.
The percentage of gender
Other impacts:
and racial/ethnic group • Reputation and ability to
representation for executives,
attract employees
technical staff, and all others. • Operating costs related
The percentage of technical to recruiting, developing,
employees who are H-1B and retaining employees
visa holders. • Operating risks from
recruiting foreign workers
The percentage of successful
H-1B visa applications.
112 113
EDUCATION
SERVICES SECTOR
Environment
Employment 73.9K 62 Human capital Quality of Graduation rate, on-time Ability to continue l l l
education completion rate, and job obtaining federal funding,
Business model and gainful placement rate. affecting availability and
Revenue US$13.0B 69 and innovation employment cost of capital.
Leadership Debt-to-annual
Net income US$398.1M 68 and governance earnings rate and Other impacts:
debt-to-discretionary • Loss of programmatic
0 5 10 15
5-year ROA 5.7% 21 earnings rate. accreditation or high
program cohort default
Industry market beta 0.96 45 Program cohort
rate, affecting revenues
default rate.
and market share
State of disclosure Top companies (in Russell 3000)** • Reputational impacts,
% disclosure 100% 1 Graham Holdings Co. affecting brand value
• Operating and capital
Apollo Education Group Inc.
% boilerplate 0% 1 expenditures to
DeVry Education Group Inc. improve quality of
*Out of 79 industries Bright Horizons Family Solutions Inc. education and ensure
Career Education Corp. gainful employment
Marketing Description of policies to Regulatory and legal lllll
and recruiting assure disclosure of key actions related to deceptive
practices performance statistics marketing practices and
Industry description State of disclosure to prospective students inappropriate recruiter
The Education industry includes educa- All companies analyzed provide in advance of collecting incentive schemes, affecting
tional institutions that are publicly held, quantitative disclosure on the two top- any fees and discussion liabilities.
profit-seeking, and generate revenue ics in the Provisional Standard. With of outcomes.
Other impacts:
from student fees. Services are delivered 100% use of metrics, the Education The amount of legal • Ability to continue
on a full-time, part-time, distance learn- industry is the best performer among and regulatory fines and obtaining federal funding,
settlements associated with affecting availability and
ing, or occasional basis across physical the 79 industries in the analysis. Metrics advertising, marketing, and cost of capital
establishments with an increasing num- on the “Quality of Education & Gainful mandatory disclosures. • Reputational impacts,
ber of students taking online courses. Employment” topic are typically Instruction and student
cohort default rates. Disclosure on the and long-term growth
services expenses • Operating costs related to
Sustainability-related risks “Marketing & Recruiting Practices” and marketing and
marketing and recruiting
and opportunities topic tends to focus on metrics on the recruiting expenses.
The education industry plays a crucial share of Title IV revenues and alleged Revenue from Title IV
role in the development and success of violations of substantial misrepresen- funding, GI Bill funding,
and private student loans.
modern society, so its link to social cap- tation regulations.
ital is strong. However, the industry has
been criticized for leaving many gradu- Exposure to financial impact
ates without adequate skills for gainful Companies in the industry provide
employment and with significant debt public-like services, and therefore bene-
burdens. Moreover, aggressive recruiting fit from a strong license to operate. Due
and deceptive marketing practices have to reliance on federal funding and high
brought closer regulatory scrutiny. education loan default rates, the govern-
ment is scrutinizing education quality
and recruiting practices of for-profit
institutions, which could impact their
revenues and funding sources.
114 115
ELECTRIC UTILITIES
INFRASTRUCTURE SECTOR
Environment
Employment 419.8K 26 Human capital Greenhouse The gross global Scope 1 Efforts to reduce and report lll l
gas emissions emissions, the percentage emissions, as well as the
Business model and energy covered under emissions- direct price on carbon,
Revenue US$356.0B 12 and innovation resource limiting regulations, and affecting operating and
Leadership planning the percentage covered capital expenditures.
under emissions-reporting
Other impacts:
0 5 10 15 regulations.
5-year ROA 2.1% 62 • Asset write-downs,
Description of long- and if regulation makes
Industry market beta 0.41 77 short-term strategy or some power plants
plan to manage Scope 1 are uneconomical to
State of disclosure Top companies (in Russell 3000)** emissions, emission- continue operating
% disclosure 94% 14 reduction targets, and an • RPS mandates and
Exelon Corp.
analysis of performance customer preference
Duke Energy Corp.
% boilerplate 39% 32 against those targets. for low-carbon energy,
The Southern Co. affecting investments,
*Out of 79 industries NextEra Energy Inc. The number of customers
market share, and
PG&E Corp. served in markets subject
revenue growth
to renewable portfolio • Emissions reduction
**As of the date of this publication standards (RPS) and the
percentage of fulfillment
business uncertainty and
of RPS target by market.
risk premiums
Industry description State of disclosure • Revenue opportunity from
The industry generates electricity, and The industry is characterized by sale of carbon credits
builds, owns, and operates transmission high levels of disclosure across all topics • Regulatory penalties
and/or distribution (T&D) lines. Utilities included in the Provisional Standard:
generate electricity from a number of only 6% of entries analyzed were cate- or expanding facilities
different sources, including coal, natural gorized as “No disclosure.” While most
gas, nuclear energy, hydropower, and reporting is boilerplate (39%), the use of Air quality The air emissions of Operational efficiencies, l l
renewables. Electric utilities operate metrics (29%) is also common, especially the following pollutants: leading to a lower cost
NOX (excluding N2O), structure over time.
in both regulated and deregulated for important environmental topics, such SOX, particulate matter
energy markets. as “GHG Emissions & Energy Resource Other impacts:
(PM10), lead, and mercury, • Permitting delays
Planning” and “End-Use Efficiency and percentage of
and/or revocations,
Sustainability-related risks & Demand.” each in or near areas
affecting project costs
of dense population.
and opportunities and profits
Society grants most electric utilities Exposure to financial impact
compliance costs
with a monopoly under the expectation Utilities face not only costs from • Capital expenditures
that they will provide an accessible and increasing environmental regulation, but to install best-in-class
highly reliable service, while minimiz- also potential stranded assets if certain control technology
• Liabilities due to legal
ing impacts to climate change, water power-generation sources become no
challenges from the local
scarcity, and human health. The industry longer financially viable. At the same time, population, businesses,
is a major source of GHG emissions; regulatory, customer, and competitive or regulators
regulatory and customer efforts to pressures related to energy efficiency,
transition to a low-carbon economy, renewable energy, and distributed genera-
alongside advances in renewable energy tion are influencing investment decisions.
and distributed generation, are chang- The industry also needs investment to
ing the industry’s sustainability profile. avoid major systems failures due to cli-
Finally, cyberattacks and the physical mate change and cyberattacks.
impacts of climate change increasingly
threaten grid resiliency.
116 117

Water The total water withdrawn, Production disruptions lll l Social capital
management total water consumed, that result from water
and the percentage of each constraints in water-stressed Community The number of projects Permitting delays lll l
in water-stressed regions. areas and/or inadequate impacts of requiring environmental or and/or revocations,
wastewater treatment, project siting social modification, and the affecting project costs
The number of incidents
affecting revenues and/or percentage of modifications and profits.
of non-compliance with
risk premiums. resulting from formal public
water quality and/or Other impacts:
quantity permits, standards, Other impacts: interventions or protests. • Project delays,
and regulations. • Operating costs associated Discussion of community affecting timing of
with water use and/or engagement processes revenue generation
Discussion of water
wastewater treatment to identify and mitigate • Loss of eminent domain
management risks and • Lower usage of baseload
description of strategies concerns regarding rights or uncertainty
plants and greater usage project environmental and about land-use or
and practices to mitigate
of higher-marginal-cost community impacts. environmental permit
those risks.
peaking plants, affecting approval, affecting
operating expenses risk premium
• Asset write-downs of • Reputational impacts,
generation plants or other affecting intangible assets
equipment due to impacts
on ability to operate Human capital
Workforce The total recordable injury Operational efficiencies and lll
health and rate, fatality rate, and near productivity improvements
to meet regulatory safety miss frequency rate. from strong worker health
requirements and install and safety performance.
more efficient systems
• Regulatory penalties and Other impacts:
compliance costs • Regulatory penalties and
• Liabilities from personal
Coal ash The amount of coal Operational efficiency and llll injury litigation
management combustion residuals cost structure impacts from
(CCR) generated and the management of coal ash.
percentage that is recycled. to attract employees
Other impacts:
The total number of • Capital expenditures Business model and innovation
coal combustion residual to strengthen
(CCR) impoundments, waste management
and number by EPA infrastructure
End-use The percentage of electric Ability to promote ll l
efficiency and load served by smart grid alternative rate designs
hazard potential • Regulatory penalties,
demand technology. and implement end-use
classification, broken remediation and
efficiency programs,
down by EPA structural compliance costs The customer electricity
affecting stability of
integrity assessment. • Liabilities from legal or savings from efficiency
long-term revenues,
regulatory actions due to measures by market.
revenue growth
improper waste disposal
opportunities, and/or
or loss of containment
risk premiums.
• High magnitude
loss-of-containment Other impacts:
incidents, possibly • Capital expenditures for
affecting risk profile smart grid and end-use
• Reputational impacts, efficiency investments
affecting intangible assets • Operating expenses to
• Revenue opportunity from implement customer
sale of spent coal ash efficiency or demand-side
management programs
• Efficiency investments,
affecting return on equity
in some areas
118 119

Leadership and governance Management Discussion of policies Long-term public and lllll
of the legal and processes to identify political support, affecting
Nuclear The total number of nuclear Capital and operating lllll and regulatory and manage potential social license to operate
safety and power units, broken down expenditures for environment ethical violations resulting and intangible assets.
emergency by Nuclear Regulatory safety compliance and from interactions with
Other impacts:
management Commission (NRC) Action best practices. utility commissions. • Regulatory uncertainty,
Matrix Column. The amount of legal affecting risk profile
Other impacts:
Discussions of efforts to • Safety concerns that and regulatory fines and • Regulatory penalties and
manage nuclear safety and affect continued settlements associated with corrective action costs
emergency preparedness. operations of nuclear allegations of violations • Unethical and illegal
plants, creating asset resulting from interactions business practices related
write-downs and loss with utility commissions. to interactions with
of future revenue regulators, potentially
Discussion of positions on
• Loss of assets and affecting future
the regulatory and political
one-time costs from rates, rate cases, and
environment related to
high-magnitude, therefore revenues
environmental and social
low-probability events factors, and description of
efforts to manage risks and
affecting ability to opportunities presented.
expand or continue
nuclear operations
• Operational risk
perceptions, affecting
cost of capital
Grid resiliency The number of incidents of Reputational impacts, lll l

non-compliance with North affecting market share and
American Electric Reliability long-term growth.
Corporation (NERC)
Other impacts:
Critical Infrastructure • Asset write-downs due to
Protection standards.
damaged plant, property,
The System Average and equipment
Interruption Duration • Lost revenue
Index (SAIDI), System during disruptions
Average Interruption • Operating costs for
Frequency Index (SAIFI), systems maintenance
and Customer Average for grid resiliency
Interruption Duration Index • R&D and capital
(CAIDI), inclusive of major expenditures for
event days. technology and
infrastructure
upgrades or to repair
damaged infrastructure
costs
• High-impact disruptions,
120 121
ELECTRICAL &
ELECTRONIC EQUIPMENT
Environment
Employment 988.3K 9 Human capital Energy Total energy consumption, Operating costs l l
Business model is grid electricity, and use in manufacturing.
0 5 10 15
5-year ROA 2.5% 55
Hazardous The percentage of waste that Operational efficiency and l ll
waste is recycled; and the amount cost structure impacts
management of hazardous waste. from using and disposing
hazardous waste.
% disclosure 87% 30 General Electric Co. quantity of reportable spills, Other impacts:
Honeywell International Inc. quantity recovered. • Regulatory penalties,
Emerson Electric Co. remediation liabilities, and
*Out of 79 industries Eaton Corp. PLC compliance costs
Ingersoll-Rand PLC
for handling
hazardous materials
This industry develops and manufactures The industry has high levels of disclo- Social capital
a broad range of electric components. sure across the topics in the Provisional
Items include non-structural commer- Standard. In line with sector-wide prac-
Product safety The number of recalls and Reputational impacts, lllll
cial and residential building equipment, tices, the use of boilerplate is common market share.
The amount of legal
such as HVAC systems, lighting fixtures, (48%), particularly for product safety and regulatory fines and Other impacts:
security devices, and elevators; electrical and sourcing topics. Quantitative settlements associated • Product recalls, creating
power equipment, including traditional disclosures were identified for a handful with product safety. one-time costs; repeated
power generation and transmission of topics, including those related to recalls, influencing
risk profile
equipment and renewable energy equip- waste, business ethics, and product life- • Warranty claims
ment; industrial automation controls; cycle management. • Liabilities from personal
measurement instruments; and electrical injury or property
components. Exposure to financial impact damage claims
Innovations to reduce environmental
Sustainability-related risks and social impacts from manufacturing
and opportunities and products can provide companies Product lifecycle The percentage of Regulations, industry lll l
Emerging trends are providing with a competitive advantage in the management products by revenue standards, and customer
opportunities for companies that are face of more stringent regulations and that contain IEC 62474 demand, influencing
innovation for declarable substances. revenues and market
focused on automation, safety, product and sustainability-focused customer environmental share expansion.
innovation, and resource efficiency. demand. Further, the industry relies The percentage of eligible
efficiency
products by revenue that Other impacts:
Stakeholders are demanding safer and on key raw materials whose sourcing is meet ENERGY STAR® criteria. • Regulatory penalties and
more energy-efficient products. Business increasingly regulated and constrained compliance costs
Revenue from renewable
ethics in operations and supply chains due to environmental and sociopolitical energy-related and energy
• R&D and capital
play an increasingly important role in factors. This is driving shifts in busi- expenditures for
efficiency-related products.
improved product
determining license to operate and con- ness operations decisions, which are The total energy cost savings lifecycle management
tract eligibility particularly as emerging creating supply disruptions and input achieved through energy and innovations
markets exposure expands. price volatility. performance contracts.
122 123
ELECTRONIC MANUFACTURING
SERVICES & ORIGINAL
DESIGN MANUFACTURING
TECHNOLOGY & COMMUNICATIONS SECTOR
Environment
# of companies 9 56
Leadership and governance Social capital
Business ethics Description of the Violations of anti-corruption lllll Employment 278.2K 36 Human capital
and competitive management system for and anti-trust laws, leading
behavior prevention of corruption to legal and regulatory Business model
and bribery throughout the penalties. Revenue US$88.0B 45 and innovation
value chain. Leadership
Other impacts: Net income US$2.1B 54 and governance
The amount of legal • Reputational impacts
0 5 10 15
and regulatory fines and and regulatory actions, 5-year ROA 4.4% 32
settlements associated affecting ability to
with charges of bribery do business and Industry market beta 1.28 19
or corruption. long-term growth
• Record of State of disclosure Top companies (in Russell 3000)**
The amount of legal
non-compliance, % disclosure 80% 47 Avnet Inc.
resulting in higher
settlements associated with Arrow Electronics Inc.
risk premium % boilerplate 55% 60
anti-competitive practices. Jabil Circuit Inc.
*Out of 79 industries Sanmina Corp.
Materials The percentage of materials Sourcing and efficient use lll l Anixter International Inc.
sourcing costs for products containing of key materials, affecting
critical materials. input costs or availability. **As of the date of this publication
The percentage of Other impacts:

tungsten, tin, tantalum, • Production disruptions,
and gold smelters within leading to lost revenue Industry description State of disclosure
the supply chain that are • Regulatory compliance Electronic Manufacturing Services Most companies analyzed disclose
verified conflict-free. costs associated with (EMS) & Original Design Manufacturing information on the topics included in the
conflict minerals (ODM) are the two main segments of Provisional Standard. Use of boilerplate
A discussion of the • Reputational
management of risks
impacts, affecting this industry. EMS companies provide (55%) is common and higher than in the
associated with the use assembly, logistics, and after-market Hardware industry; particularly for top-
long-term growth
conflict minerals.
• R&D expenses for services for original equipment man- ics related to supply chains and resource
alternative inputs ufacturers. ODM companies provide use. Relative to other topics, disclosure on
materials and the lack engineering and design services for orig- “Fair Labor Practices” is more tailored to
of ability to source them inal equipment manufacturers and may company’s unique circumstances.
effectively, possibly own significant intellectual property.
resulting in higher Exposure to financial impact
risk premiums
Sustainability-related risks Sustainability issues in hardware
and opportunities manufacturing, sourcing, product use,
Increasing public and regulatory pres- and end-of-life stages influence financial
sure on the industry’s main customers value. Many of the chemicals used in
to improve the environmental and social products are hazardous to human health
performance across their supply chain and the environment and are subject
drives sustainability challenges for the to increasingly stringent regulations.
EMS & ODM industry. Companies face Poor labor standards could create reme-
pressure to reduce water use and waste diation costs from customer pressure.
generation in manufacturing, while Further, dependence on critical mate-
ensuring fair working conditions and rials can create supply chain risks or
protecting worker health and safety. affect demand. EMS & ODM companies
can grow through innovation to solve
environmental and social challenges
associated with the rapidly increasing
use of hardware products.
124 125

Water The total water withdrawn, Market share impacts from ll ll Product lifecycle The percentage of products Legislation, industry lll
and waste the percentage recycled, failing to meet criteria management by revenue that contain standards, and customer
management in and the percentage in of supplier selection and IEC 62474 declarable demand; all influence the
manufacturing water-stressed regions. review process of hardware substances. ability to capture new
company customers. markets and customers.
The amount of hazardous The percentage of eligible
waste from manufacturing; Other impacts: products by revenue meeting Other impacts:
and the percentage of waste • Production disruptions, the requirements for EPEAT® • Operational efficiencies,
that is recycled. affecting revenues and/or certification or equivalent. such as product and
risk premiums supply chain optimization
• Operating costs associated affecting cost structure
materials recovered and the • Regulatory penalties and
with water use and/or
percentage of recovered
waste management compliance costs
materials that are recycled. • R&D and capital
to meet regulatory expenditures for
requirements and install improved product
more efficient systems lifecycle management
remediation liabilities, and Supply chain The percentage of products Sourcing and efficient use lll l
compliance costs management by revenue that contain of key materials, affecting
and materials critical materials. input costs or availability.
Human capital sourcing
The percentage of tungsten, Other impacts:
tin, tantalum, and gold • Production disruptions,
Fair labor The total Recordable Reputational impacts and llll smelters within the supply leading to lost revenue
practices Injury Rate and Near loss of customers from chain that are verified as • Regulatory compliance
Miss Frequency Rate for recurring labor issues. conflict-free. costs associated with
full time employees and conflict minerals
Other impacts: Discussions of the
contract employees. • Production • Reputational
disruptions management of risks
The number and total from labor unrest impacts, affecting
duration of work stoppages. • Operational efficiencies long-term growth
of critical materials and • R&D expenses for
and productivity conflict minerals.
The percentage of facilities alternative inputs
improvements from
and supplier facilities • Higher risk premiums for
strong labor standards
audited against the EICC • Cost structure impacts those companies that rely
Validated Audit Process (VAP) heavily on critical materials
from pressure to
or against an equivalent but lack the ability to source
improve wages and
social and environmental them effectively
working conditions
responsibility code • One-time expenses
of conduct.
or liabilities from
Social and environmental regulatory action and
responsibility audit customer demand for
compliance for registrant corrective actions
and suppliers: priority
nonconformance rate
and associated corrective
action rate, and other
non-conformances rate
action rate.
126 127
ENGINEERING &
CONSTRUCTION SERVICES

Environment
Social capital
Business model
Leadership
Net income US$817.6M 65 and governance
0 5 10 15
5-year ROA 2.3% 58

% disclosure 87% 30 Fluor Corp.
AECOM
Chicago Bridge & Iron Co. NV
*Out of 79 industries Jacobs Engineering Group Inc.
Quanta Services Inc.

The Engineering & Construction Most companies analyzed disclose
(E&C) Services industry provides design, information on the topics included in
consulting, contracting, construction, the Provisional Standard. However, most
engineering, and other related services reporting is boilerplate (47%), especially
that support various building and for topics, such as: “Environmental
infrastructure projects. The industry’s Impacts of Project Development,”
customers include infrastructure owners “Business Ethics & Bidding Integrity,”
and developers in the public and private and “Structural Integrity & Safety.” Use
sectors. of metrics (25%) is also common, espe-
cially for reporting on climate impacts
Sustainability-related risks of business mix and worker safety.
and opportunities
Buildings and infrastructure projects Exposure to financial impact
have an inherent impact on local ecosys- As sustainability trends increase, E&C
tems and communities. E&C companies companies with expertise in climate
therefore need to integrate environ- mitigation, environmental services,
mental and social considerations into and sustainable design will see revenue
project design to reduce negative impacts growth opportunities. High injury and
throughout its lifecycle. Additionally, fatality rates in the industry impact oper-
the structural integrity and safety of ating costs and liabilities. Also, recurrent
buildings and infrastructure is important structural safety problems can impact
to reduce risks of personal injury and brand value, revenues, and litigation
loss of property value, especially in the expenses. Finally, risks also arise from
face of increasing risks from a changing corruption, bribery, and fraud during
climate. A safety culture that reduces the project bids, which can create liabilities
number of worker fatalities and injuries or lead to loss of business.
is equally critical.
129

Environmental The number of incidents Timeliness of construction lllll Climate The backlog for Exposure to low- versus ll l
impacts of non-compliance with and expected project impacts of hydrocarbon-related high-carbon industries
of project environmental permits, expenses, affecting business mix projects and renewable in the business mix,
development standards, and regulations. ability to secure new energy projects. affecting demand
business contracts in a and therefore revenues
Discussion of processes The amount of backlog
competitive industry. and long-term growth.
to assess and manage cancellations associated
environmental risks Other impacts: with hydrocarbon-related Other impacts:
associated with • Reputational impacts, projects. • Potential impact on risk
project design, siting, affecting brand value premiums from perceived
The backlog for non-energy
and construction. • Regulatory penalties risk of business mix
• Loss of revenue from
projects associated with • R&D expenses to
climate change mitigation.
project cancellations develop expertise in
low-carbon infrastructure
Social capital or building segments
Structural The amount of defect- Reputational impacts, lllll Lifecycle The number of Growth in demand lll
integrity and related and safety-related affecting long-term growth. impacts of commissioned projects for a sustainable built
safety rework expenses. buildings and certified to a multi-attribute environment, affecting
Other impacts: infrastructure sustainability standard and market share, ability to
The amount of legal • One-time costs active projects seeking charge price premiums,
and regulatory fines from rework such certification. and long-term growth.
and settlements associated • Liabilities from lawsuits
with defect- and involving affected clients Description of process to
safety-related incidents. and other third parties incorporate operational-
• Defect and safety phase energy and water
track record, affecting efficiency considerations
risk premiums into project planning
and design.
Human capital
Workforce The total recordable injury Operational efficiencies and llll
health and rate and fatality rate for productivity improvements Business ethics The number of active Violations of anti-corruption lllll
safety direct employees and from strong worker health and bidding projects and backlog and anti-trust laws, leading
contract employees. and safety performance. integrity in countries that have to legal and regulatory
the 20 lowest rankings penalties.
Other impacts: in Transparency
International’s Corruption • Reputational
corrective action costs impacts
Perception Index.
• Liabilities from personal and regulatory actions,
injury litigation The amount of legal affecting ability to
• Reputation and ability and regulatory fines and do business and
to attract employees settlements associated long-term growth
• Impact on timeliness with charges of bribery, • Record of
and on-budget corruption, and/or non-compliance,
completion of projects, anti-competitive practices. resulting in higher
or on competitiveness risk premiums
Description of policies and
or qualification of bids, practices for prevention
affecting revenue and of corruption, bribery,
market share and/or anti-competitive
behavior in the project
bidding processes.
130 131
FOOD RETAILERS & DISTRIBUTORS
Environment
Employment 654.2K 17 Human capital Air emissions The gross global Scope 1 Additional costs, including l
from emissions from refrigerants. capital and operating
Business model refrigeration expenditures to monitor
Revenue US$251.0B 19 and innovation The percentage
and manage HFC and
Leadership of refrigerants
HCFC leaks or use
Net income US$3.8B 43 and governance consumed with zero
alternative refrigerants.
ozone-depleting potential.
0 5 10 15
5-year ROA 3.3% 46 Other impacts:
Industry exposure Market average exposure The average refrigerant • Regulatory penalties for
Industry market beta 0.65 72 emissions rate.
HCFC or HFC emissions
• Emissions reduction,
State of disclosure Top companies (in Russell 3000)** possibly improving
% disclosure 82% 41 Kroger Co. operational efficiency and
generate net cost savings
Sysco Corp. • Emissions reduction
SUPERVALU Inc. efforts, possibly lowering
*Out of 79 industries Whole Foods Market Inc. business uncertainty
Performance Food Group Co. and risk premiums
or expanding facilities
Industry description State of disclosure Energy and Operational energy Operating costs lll l
This industry is involved in wholesale Most companies analyzed disclose fleet fuel consumption, the associated with energy
and retail sales of an array of agricultural, information on several of the topics management percentage that is use in operations.
food, beverage, and household and per- in the Provisional Standard. While grid electricity, and
Other impacts:
the percentage that is
sonal products. Store formats include reporting is generally boilerplate (44%), renewable.
retail and warehouse supermarkets, the use of tailored narrative (18%) and and lower costs passed
The fleet fuel to customers, affecting
natural and specialty food stores, and dis- metrics (20%) is also common, particu- consumption and the market share
tribution centers. The industry manages larly for labor, energy, and fuel use, and percentage that is • Capital expenditures for
global supply chains. health and nutrition topics. Boilerplate renewable fuel. energy-related projects
language is used extensively to describe and fleet management
Sustainability-related risks food safety and data security risks; only
and opportunities a few companies provide disclosure on
Food waste The amount of food Impacts on saleable lll
management waste generated and the merchandise, affecting
Given the industry’s direct influence food waste. percentage that is diverted revenues and value of
over consumers’ food options, issues of from the waste stream. assets in inventory.
product quality, health attributes, and Exposure to financial impact Other impacts:
marketing integrity are key. Additionally, Companies need to capitalize on • Operational efficiency and
cost structure impacts
food waste can have implications for food consumer demand shifts towards
from reducing food waste
security, while the amount of energy healthier and sustainably produced • Efficient shelf-stocking
and chemical refrigerants used in oper- foods. Together with food safety issues, methods and sale
ations has environmental implications. cyber-security, labor standards, and of items destined for
disposal, affecting
Protecting consumer data is a priority an inclusive workforce, these shifts
customer satisfaction and
as cyberattacks grow in frequency and can influence reputation and long-term revenue growth
sophistication. Further, water scarcity, growth. Strong labor practices also • Additional operating
animal welfare, and labor practices affect reduce litigation risks, while energy expenses to improve food
waste management
the industry through its supply chain. efficiency and use of safer refrigerants
can affect costs and regulatory risks.
132 133

Social capital Product health Revenue from products Customer demand for l l
and nutrition labeled and marketed healthier foods and
Data security Discussion of management Reputational impacts lllll to promote health and potential regulatory
approach to identifying and ability to combat nutrition attributes. bans or taxes, affecting
and addressing data cyberattacks, affecting market share.
Description of the process
security risks. revenues and to identify and manage Other impacts:
long-term growth. products and ingredients • Benefits to inventory
The number of data
security breaches, the Other impacts: of concern and emerging management if products
percentage that involves • Remediation costs, dietary preferences. meet consumer
customers’ personally penalties, and liabilities expectations on
identifiable information, from customer or healthier products
and the number of regulatory action • Reputational impacts,
customers affected. • Capital expenditures affecting brand value and
for technology and long-term growth
system upgrades • Operating cost impacts
• Regulatory compliance through changes to
costs and operational sourcing practices and
expenses to ensure marketing expenditures
data security to promote healthier and
• High-profile data security more nutritious products
breaches, affecting
risk profile Product Notices of violations Violations of regulations llll
labeling and received for related to deceptive
Food safety The high-risk food safety Reputational impacts lllll marketing non-conformance with marketing and labeling
violation rate. that lower consumer regulatory labeling practices, affecting
foot traffic or spending and/or marketing codes. liabilities.
The number of
on certain products, or The amount of legal Other impacts:
food-safety-related recalls,
permit restrictions for new and regulatory fines and • Truthfulness of labeling,
number of units recalled,
facilities, both affecting settlements associated usefulness of information
and the percentage that are
demand and market share. with food marketing provided, as well as
for private-label products.
Other impacts: and/or labeling. implied product attributes,
• Food product recalls all three affecting demand
Revenue from products
and safety incidents, and market share
labeled as containing • Reputational impacts,
creating one-time costs; genetically modified
and repeated incidents, affecting brand value
organisms (GMOs), and • Regulations regarding
influencing risk profile labeled as non-GMO.
• Regulatory penalties for labeling, including of
food safety violations products with GMOs,
• Closure of distribution affecting marketing and
facilities due to regulatory other operating costs
action, affecting
asset value
• Legal liabilities related
to product contamination
related to safety standards
134 135

Human capital Leadership and governance
Fair labor The average hourly Reputational impacts and lllll Management Discussion of strategy to Sustainable products on lll l
practices wage and percentage loss of customers from of manage environmental shelves help capitalize on
of in-store employees recurring labor issues, environmental and social risks within the consumer trends favoring
earning minimum wage. affecting revenues and/or and social supply chain. such products, affecting
risk premium. impacts in the ability to charge price
The percentage of Revenue from products
supply chain premiums and expanding
active workforce Other impacts: third-party certified to
market share.
covered under collective • Operational disruptions an environmental and/
bargaining agreements. from labor unrest, or social sustainability Other impacts:
affecting sales sourcing standard. • Reputational impacts on
The number and total • Cost structure impacts brand value
duration of work stoppages. Percentage of eggs sold
from pressure to • Benefits to inventory
from cage-free sources,
The amount of legal improve wages and management if products
and percentage of pork
and regulatory fines working conditions meet consumer expectations
sold from gestation-crate
and settlements • Operational efficiencies on sustainability
free sources.
associated with labor and productivity • Operational efficiencies
law violations and with improvements from Description of strategies to from optimizing packaging
employment discrimination. strong labor standards reduce the environmental materials usage and logistics,
and lower turnover impact of packaging. affecting cost structure
• Liabilities from • Sustainability issues in
employee lawsuits the supply chain, possibly
• Regulatory penalties and affecting product supply
corrective actions costs and purchase costs
• Operating costs related • Operating cost impacts
to recruiting, developing, through changes to
and retaining employees sourcing practices
136 137
FORESTRY & LOGGING
Environment
# of companies 4 71
Employment 13.9K 72 Human capital Ecosystem The area of forestland Forestry management, lll l
services and certified to a third-party affecting timber production
Business model impacts forest management and payments for
Revenue US$8.3B 73 and innovation standard, and the ecosystem services.
Leadership percentage certified to
Net income US$575.5M 67 and governance Other impacts:
each standard. • Value of timber inventory
0 5 10 15
5-year ROA 5.2% 27 The area of forestland balance sheet assets
with protected • Operating costs
Industry market beta 1.19 26 conservation status. from efforts to raise
timber yields
State of disclosure Top companies (in Russell 3000)** The area of forestland in • Reputational impacts,
endangered species habitat.
% disclosure 78% 54 Weyerhaeuser Co. affecting product
Discussion of approach for demand, government
Potlatch Corp.
% boilerplate 39% 33 optimizing opportunities permits, and risk
Rayonier Inc. from ecosystem services premiums for access
*Out of 79 industries CatchMark Timber Trust Inc. provided by forestlands. to capital
Social capital
Rights of The area of forestland in Operational disruptions l l l

indigenous indigenous land. from disputes over land
peoples claims or forestry permits
The Forestry & Logging industry Disclosure practices across the differ- Discussion of engagement
due to social concerns,
processes and due
consists of companies that own and/or ent topics included in the Provisional affecting revenues.
diligence practices with
manage forestry lands and timber Standard are varied. All companies respect to human rights, Other impacts:
tracts, operate non-retail tree nurser- analyzed provide information on the indigenous rights, and the • Reputational impacts,
ies and rubber plantations, or conduct risks and/or opportunities stemming local community. affecting access to
forestlands, relationships
logging and harvesting operations. The from “Climate Change Adaptation” using
with key customers,
industry operates in naturally regener- boilerplate language. Disclosure on the and the ability to obtain
ated and planted forests, which can be “Ecosystem Services & Impacts” topic is certification of forestlands
company-owned or leased from public or more tailored to each company’s unique • Status of certification,
affecting value of
private landowners. Companies typically circumstances. Only a small number of
timber assets
sell timber to wood products manufac- companies provide disclosure on “Rights • Impacts on risk premiums
turers, pulp and paper producers, and of Indigenous Peoples.” from frequent certification
energy producers. or operational suspensions
Sustainability-related risks The industry derives value from the
and opportunities forest ecosystem and its regenerative
Rising demand for agricultural land ability. Management of sustainable for-
and forest products, combined with the estry management and accounting for
effects of a changing climate, will likely climate change impacts are important
place increasing strain on the world’s for maintaining forest productivity.
forests. Forestry and logging activities Forestry companies rely on permits from
have the potential to impact fragile forest public, private, and indigenous groups
ecosystems, as well as forest-dependent to harvest timber and depend on sup-
communities, which means there is a port from employees and communities.
strong link between the industry and Adverse social or environmental impacts
environmental and social capital. could harm a company’s social license
to operate.
138 139
FUEL CELLS &
INDUSTRIAL BATTERIES
Environment
# of companies 3 76
Climate change Discussion of strategy to Net reductions in forest lll l Employment 10.6K 75 Human capital
adaptation manage opportunities productivity, lowering the
for and risks to forest volume of salable product; Business model
management and timber conversely, in some regions, Revenue US$2.8B 78 and innovation
production presented by net improvements in Leadership
climate change. productivity resulting from Net income US$96.1M 71 and governance
climate change. 0 5 10 15
5-year ROA 2.5% 56
Other impacts:
• Lower growth or timber Industry market beta 1.46 7
damage, possibly
adversely affecting the State of disclosure Top companies (in Russell 3000)**
value of standing timber % disclosure 93% 17 EnerSys
inventory and/or land
FuelCell Energy Inc.
(over time this could % boilerplate 53% 58
affect the risk premiums Plug Power Inc.
if impacts are seen as *Out of 79 industries
likely to persist)
• Adaptation efforts,
possibly increasing
operating costs, as
well as R&D and
capital expenditures Industry description fuel cells and industrial batteries, in turn
The industry consists of companies that contributing to clean energy efforts.
manufacture fuel cells for energy pro-
duction and energy storage equipment, State of disclosure
such as batteries. Manufacturers mainly Given its small size, the disclosure analy-
sell business-to-business products to sis for this industry focused only on three
companies for varied energy generation companies. In most cases, these compa-
and storage applications and inten- nies provided disclosure on all the topics
sities. Industry players design, build, included in the Provisional Standard;
and sell products that have a range of however, use of boilerplate language
material inputs, including natural gas, is common (53%), in particular for the
lead, lithium, and other rare earth and “Materials Sourcing” topic. Disclosure
critical materials. on “Workforce Health & Safety” and
“Product End-of-life Management”
Sustainability-related risks tends to be more tailored to each compa-
and opportunities ny’s unique circumstances.
To ensure long-term sustainable growth,
companies in the industry need to Exposure to financial impact
manage several issues, including the The industry’s long-term success
improper disposal of hazardous mate- depends on its ability to compete with
rials, the use of rare earth metals and conventional sources of energy on a cost
conflict minerals, and health and safety basis. Fuel cell and industrial battery
hazards for workers. The heavy reliance manufacturing is a materials-intensive
on certain critical materials may hinder process that is impacted by growing
the industry’s ability to scale if a supplier resource constraints and increasing
is at risk. On the other hand, technolog- prices of critical materials. Regulations
ical advancements in products’ energy could also constrain the supply of critical
efficiency could propel the utilization of inputs.
140 141

Environment Product The percentage of products Recovery and recycling of ll l

end-of-life sold that are recyclable critical materials, helping
Energy Total energy consumption, Operating costs associated ll l management or reusable. achieve significant cost
management the percentage that with energy use savings and insulate
is grid electricity, and in manufacturing. companies from the
material recovered and the
the percentage that risk of rising prices or
Other impacts: percentage of recovered
is renewable. the unavailability of
• Improved commercial materials that are recycled.
key materials.
viability and Discussion of approach to
cost-competitiveness Other impacts:
manage use, reclamation, • Regulatory penalties
of products through and disposal of
operational efficiency and compliance costs
hazardous materials. • R&D expenses for
energy-related projects improved recyclability,
• Potential energy supply recycling, or reuse
disruptions, affecting of products
risk profile • Innovations or regulatory
actions, impacting
Human capital revenue growth
Workforce The total recordable injury Operational efficiencies and lll Leadership and governance
health and rate and fatality rate. productivity improvements
safety
Discussion of efforts to
from strong worker health Materials The percentage of materials Sourcing and efficiently lll l
and safety performance. sourcing costs for items containing using key materials,
assess, monitor, and reduce critical materials. affecting input costs
exposure of workforce to Other impacts: or availability.
human health hazards. • Regulatory penalties and The percentage of tungsten,
corrective actions costs tin, tantalum, and gold Other impacts:
• Liabilities from smelters within the supply • Production disruptions,
employee lawsuits chain that are verified as leading to lost revenue
• Reputational impacts, conflict-free. • Regulatory compliance
affecting ability to costs associated with
Discussion of the
expand operations conflict minerals
management of risks • Reputational impacts,
Business model and innovation affecting long-term
growth
conflict minerals. • R&D expenses for
Product The average storage Increasing market demand ll l alternative inputs
efficiency capacity of batteries. for energy storage and
• Heavy reliance on
supply technologies that
The average energy critical materials but
reduce the total cost of
efficiency of fuel cells as a lack of ability to
ownership, helps customers
electrical efficiency and source them effectively,
reduce their environmental
thermal efficiency. possibly resulting in
footprint, while enabling
The average greater integration higher risk premiums
battery efficiency as of renewable energy
coulombic efficiency. technologies into the grid.
The average operating Other impacts:
lifetime of fuel cells. • R&D resources in to
improve products’
The average operating
storage capabilities and
lifetime of batteries.
energy efficiencies
• Lower risk profile
for breakthrough
technologies
142 143
GAS UTILITIES
Environment
Employment 41.6K 67 Human capital End-use Customer gas savings Ability to promote ll l
efficiency from efficiency measures alternative rate designs
Business model by market. and implement end-use
Revenue US$30.9B 62 and innovation efficiency programs,
Leadership affecting stability
of long-term revenues,
0 5 10 15 revenue growth
5-year ROA 2.4% 57
Industry exposure Market average exposure opportunities, and/or
Industry market beta 0.58 75 risk premiums.
Other impacts:
State of disclosure Top companies (in Russell 3000)** • Capital expenditures
% disclosure 100% 1 UGI Corp. for end-use
efficiency investments
NiSource Inc. • Operating expenses
Atmos Energy Corp. to implement customer
*Out of 79 industries New Jersey Resources Corp. efficiency programs
WGL Holdings Inc.
Operational The number of reportable Operational risk llll

safety, pipeline incidents, perceptions, affecting
emergency Corrective Action Orders cost of capital.
The industry is made up of natural gas All companies analyzed disclose infor- preparedness, (CAO), and Notices of
Other impacts:
distribution and marketing companies. mation on the two topics included in and response Probable Violation (NOPV). • Loss of assets and
Gas distribution involves operating local the Provisional Standard; such disclosure The average response time one-time costs from
low-pressure pipelines. Gas marketing is provided using metrics in more than for gas emergencies. high-magnitude,
companies are gas brokers that aggregate one third of cases (35%). While this is The percentage of
low-probability events
natural gas into quantities that fit the relatively better than other utility-type distribution pipeline that is
to upgrade
needs of their different customers. Gas industries in the sector, the use of boiler- cast and/or wrought iron
aging infrastructure
and unprotected steel.
utilities transport this gas to residential, plate (55%) is still common. The industry • Reduced capacity
commercial, and industrial end users. is a top performer across the 79 indus- Discussion of management operations,
systems used to affecting revenues
In structurally regulated markets, the tries included in the analysis.
integrate a culture of • Legal or regulatory action,
utility is granted a full monopoly over the safety and emergency resulting in liabilities
distribution and sale of natural gas. Exposure to financial impact preparedness throughout • Regulatory
Gas Utilities enjoy certain business project lifecycles. compliance costs
Sustainability-related risks protections, which increase societal
affecting ability to expand
and opportunities expectations around the industry’s social operations, and thereby
Natural gas is a critical energy source license to operate. In some regions, long-term growth
for economic activity. Gas utilities must regulations are pushing companies
maintain strict safety standards on their to improve end-use efficiency, creating
distribution networks as leaks have the direct and indirect rewards for com-
potential to cause significant injuries panies that can achieve these goals.
and property damage. While natural gas Furthermore, companies that demon-
is a cleaner form of energy than many strate leadership and strong governance
other sources, companies need to watch procedures directed at accident preven-
for fugitive emissions, which can be tion and prompt corrective action during
significant. emergencies can reduce operational
disruptions and reduce fines and litiga-
tion expenses.
144 145
HARDWARE

Environment
Social capital
Business model
Leadership
0 5 10 15
5-year ROA 8.3% 4

% disclosure 55% 73 Apple Inc.
HP Inc.
Cisco Systems Inc.
*Out of 79 industries Western Digital Corp.
Corning Inc.

The Hardware industry consists of The industry is characterized by low
companies that design or manufacture levels of disclosure with 45% of entries
technology hardware products, including categorized as “No Disclosure.” This
personal computers, consumer electron- figure is the highest for any industry in
ics, communications equipment, storage the sector and is mainly driven by lack
devices, components, and peripherals. of disclosure on “Employee Inclusion”
The industry relies heavily on the and “Supply Chain Management &
EMS & ODM industry for both design Materials Sourcing.” When available,
and manufacturing services. most disclosure on the topics included
in the Provisional Standard is provided
Sustainability-related risks using boilerplate language (35%) or
and opportunities metrics (18%).
The industry is revolutionizing
communications and information shar- Exposure to financial impact
ing by designing smarter devices and Designing new or improving existing
democratizing technology. Increasing products to protect consumer data and
global resource constraints, concerns to address the environmental external-
about climate change, and the impacts of ities of product use can in turn affect
pollution on human health and the envi- brand reputation and demand, impacting
ronment pose challenges to the industry. revenues. The industry also faces supply
Companies able to harness their innova- and sourcing challenges that
tion potential to address the externalities can impact reputation and operating
of their product lifecycles will be well costs. Finally, the industry relies on
positioned to enhance shareholder value. a diverse and highly-skilled workforce
for long-term growth.
147

Social capital Leadership and governance
Product security Discussion of approach to Reputational impacts lllll Supply chain The percentage of products Sourcing and efficient use lll l
identifying and addressing from product security management by revenue that contain of key materials, affecting
data security risks to new vulnerabilities, affecting and materials critical materials. input costs or availability,
and existing products. revenues and long-term sourcing cost structure impacts from
The percentage of
growth; also specific labor standards, and wages
tungsten, tin, tantalum,
hardware solutions to in the supply chain.
and gold smelters within
enhance cyber-security,
the supply chain that are Other impacts:
affecting revenue growth.
verified as conflict-free. • Production disruptions,
Other impacts: leading to lost revenue
Discussion of the • Reputational impacts,
management of risks
from customer or affecting brand
regulatory action value, revenues, and
• R&D and capital long-term growth
conflict minerals. • Higher risk premiums
expenditures for product
security improvements The percentage of suppliers from poor labor
• High-profile data security audited against the EICC standards, heavy reliance
breaches, affecting Validated Audit Process (VAP) on critical materials,
risk profile or against an equivalent and inability to source
social and environmental them effectively
Human capital responsibility code • R&D expenses for
of conduct. alternative inputs or
Employee The percentage of gender Stronger innovation and lll sourcing methods
Suppliers’ social and • Regulatory compliance
inclusion and racial/ethnic group superior ability to cater to environmental responsibility
representation for executives a diverse customer base, costs associated with
audit compliance: priority
and all others. with impact on both market conflict minerals
non-conformance rate
share and pricing power. and associated corrective
Other impacts: action rate, and other
• Reputation and ability non-conformances rate
to attract employees and associated corrective
• Operating costs related action rate.
Product lifecycle The percentage of products Regulations, industry ll l

management by revenue that contain IEC standards, and customer
62474 declarable substances. demand, influencing
revenues and market
The percentage of eligible
share expansion.
products by revenue meeting
the requirements for EPEAT® Other impacts:
certification or equivalent. • Operational efficiencies
(such as product
The percentage of eligible
and supply chain
products by revenue meeting
optimization), affecting
ENERGY STAR® criteria.
cost structure
The weight of products and • Regulatory penalties and
e-waste recovered through compliance costs
take-back programs, and • R&D and capital
the percentage of recovered expenditures for
materials that are recycled. improved product
148 149
HEALTH CARE DELIVERY
HEALTH CARE SECTOR
Environment
Employment 1.2M 5 Human capital Energy The total annual energy Operating costs ll
and waste consumption and associated with energy
Business model efficiency the percentage that use – especially in the
Revenue US$195.8B 26 and innovation is renewable. context of facilities running
Leadership 24/7 – and management of
Net income US$6.1B 40 and governance The total weight of
medical waste.
regulated medical waste
0 5 10 15
5-year ROA 3.2% 48 generation and total Other impacts:
weight by disposition (e.g., • Capital expenditures
Industry market beta 0.77 62 on-site incineration, landfill, for energy- and
treatment/storage/disposal waste-related projects
State of disclosure Top companies (in Russell 3000)** facility, etc.). • Potential energy supply
% disclosure 94% 16 HCA Holdings Inc. disruptions, affecting
The total weight of
risk profile
Community Health Systems Inc. pharmaceutical waste • Regulatory penalties and
% boilerplate 43% 37 generation and total
Tenet Healthcare Corp. reputational harm for
*Out of 79 industries DaVita Inc. weight by disposition,
improper management
Universal Health Services Inc. broken down by hazardous
of medical waste
waste and non-hazardous
**As of the date of this publication (solid) waste.
Climate Descriptions of the Operational disruptions ll l

Industry description State of disclosure change strategy to address the due to climate change,
The industry owns and manages The industry is characterized by high impacts effects of climate change creating one-time costs and
on human on business operations, revenue loss.
hospitals, clinics, and other related levels of disclosure across all topics health and physical infrastructure, and
facilities; and it is primarily engaged included in the Provisional Standard: Other impacts:
infrastructure facility design. • Regional changes in
in providing inpatient and outpatient only 6% of entries analyzed were cate- Discussion of specific risks demand for health
care, anatomical pathology services, and gorized as “No disclosure.” This is the (such as physical risks) care services as a
clinical laboratory services. Health care lowest figure in the sector. While most presented by changes in the result of more volatile
services are increasingly fragmented into reporting is boilerplate (44%), the use frequency and intensity of climate conditions and
extreme weather events and disease migration,
specialized facilities that provide a range of tailored narrative (19%) and metrics changes to the morbidity affecting revenues and
of care, including surgery, mental health, (33%) is also common, especially for and mortality of illnesses market share
hospice, and homes for the elderly. topics, such as “Access for Low-Income and diseases. • Asset write-downs due
Patients,” “Quality of Care & Patient to property damage from

climate change impacts
Sustainability-related risks Satisfaction,” and “Fraud & Unnecessary • Capital expenditures for
and opportunities Procedures.” climate change adaptation
Recent legislation has focused on increas- or property restoration
• Higher insurance
ing health insurance coverage, improving Exposure to financial impact
premiums or difficulty
quality of care, and reducing costs. While Regulatory efforts and public interest obtaining insurance for
navigating an evolving regulatory environ- in access and affordability of health care at-risk properties
ment focused on reducing over-utilization services (especially those for middle- • Exposure to climate
of health care services, the industry pro- and low-income patients) and in overall change impacts, affecting
risk premium
vides an essential public good, creating transparency of pricing and need for
a strong link to social capital. Amid a medical procedures, are poised to impact
shortage of skilled medical professionals, the industry’s revenue-generating
trends suggest that the industry will be potential and profitability. Moreover, an
required to produce better outcomes increased emphasis on quality of care
and manage costs, while facing a need to and an industry-wide shortage of skilled
expand capacity in light of the increasing medical professionals are likely to affect
number of insured individuals. cost structures and profits.
150 151

Social capital Patient privacy Percentage of patient Remediation costs, llll

and electronic records that are electronic penalties, and liabilities
Quality of care Hospital Values Based Patient-outcome- lll l health records medical records (EMR) or from customer or
and patient Purchasing Total driven payments and electronic health records regulatory action.
satisfaction Performance score, broken impacts to reputation, (EHR), meeting the Centers
Other impacts:
down by Clinical Process affecting demand for for Medicare and Medicaid • Reputational impacts and
Domain score, Outcome services, revenues, and Services (CMS) “meaningful
ability to combat cyber
Domain score, and Patient long-term growth. use” requirements.
attacks and ensure data
Experience Domain score. Legal and regulatory privacy, affecting revenues
Other impacts:
The number of Serious • Operating costs to fines and settlements and long-term growth
Reportable Events (SREs) ensure quality of care associated with Health • Capital expenditures
as defined by the National and reduce infections Insurance Portability and for technology and
Quality Forum. Accountability Act of system upgrades
1996 (HIPAA) Privacy and • Regulatory compliance
The health care-acquired Security Rules violations, costs and operational
infections, as defined or The Health Information expenses to ensure data
by the CDC’s National Technology for Economic privacy and security
Healthcare Safety Network, and Clinical Health (HITECH) • High-profile data security
for: Central Line-associated Act violations. breaches, affecting
Bloodstream Infections risk profile
(CLABSIs); Surgical Description of corrective
Site Infections (SSIs); and actions implemented in
Catheter-associated Urinary response to these events.
Tract Infections (CAUTIs).
Human capital
The excess readmission
ratio for pneumonia, acute
myocardial infarction, and Employee Voluntary and involuntary Competition for talent in lll
heart failure, as defined by recruitment, employee turnover for a highly skilled industry
the Centers for Medicare development, executives/senior managers, and high employee
& Medicaid Services (CMS). and retention mid-level managers, turnover rates, affecting
professionals, and all others. quality of care and
Readmissions Payment thereby market share and
Adjustment Amount Description of talent
long-term growth.
as part of the recruitment and retention
Hospital Readmissions efforts for health care Other impacts:
Reduction Program. practitioners, such as • Reputation and ability
mentorship programs, to attract employees
flexible scheduling, • Operating costs related
Access for Descriptions of strategy Expanding patient base, via ll and leadership to recruiting, developing,
low-income to manage the mix of increased health insurance
development initiatives. and retaining employees
patients patient insurance status enrollment, impacting
(e.g., private insurance, revenues and long-term Where applicable,
government insurance, growth potential. participation or utilization
and uninsured), including rates for each type of effort.
Other impacts:
a description of alternative • Operatingexpenses
pricing mechanisms or
to provide access for
programs for the uninsured.
low-income patients
The amount of Medicare
Disproportionate Share
Hospital (DSH) adjustment
payments received.
152 153
HEALTH CARE DISTRIBUTORS
HEALTH CARE SECTOR
Environment
Fraud and Legal and regulatory fines Liabilities from legal and llll Employment 181.2K 47 Human capital
unnecessary and settlements associated regulatory actions.
procedures with Medicare and Business model
Other impacts: Revenue US$447.1B 8 and innovation
Medicaid Fraud under the • Remediation costs
False Claims Act. Leadership
0 5 10 15
actions implemented in 5-year ROA 3.4% 45
response to these events.
Pricing Descriptions of policies Trends toward clinical l l State of disclosure Top companies (in Russell 3000)**
and billing or initiatives to ensure that transparency that impact
transparency patients are adequately companies’ competitive % disclosure 51% 75 McKesson Corp.
informed about price before position and reputation, AmerisourceBergen Corp.
undergoing a procedure. affecting patient volumes % boilerplate 43% 39
Cardinal Health Inc.
and revenues.
Descriptions of how pricing *Out of 79 industries Henry Schein Inc.
information for services Owens & Minor Inc.
is made publicly available,
including the number **As of the date of this publication
of the registrant’s 25 most
common services for which
pricing information is Industry description State of disclosure
publicly available, and the Health care distributors supply medical The industry is characterized by low
percentage of total services
performed (by volume) that equipment and drugs to hospitals, phar- levels of disclosure with 49% of entries
these represent. macies, and physicians. The industry categorized as “No disclosure.” This
includes companies that wholesale and figure is the highest for any industry in
distribute medical technology and sup- the sector, and is mainly driven by lack of
plies, including surgical appliances and disclosure on a handful of topics, includ-
laboratory equipment, to health care ing “Product Lifecycle Management”
providers as well as those involved in the and “Fuel Efficiency.” When available,
wholesaling and distribution of pharma- disclosure on the topics included in the
ceutical and biotechnology products. Provisional Standard is typically boiler-
plate (43%).
Like many other companies in the sector, Product safety issues, including those
health care distributors face risks and resulting from the storage, distribution,
opportunities related to the expansion handling, labeling, and packaging of
of health insurance, an increased focus drugs and medical devices (along with
on cost containment, and an aging pop- reporting and record-keeping require-
ulation. As intermediaries among drug ments of health care products and
manufacturers, medical equipment man- controlled substances) pose risks that, if
ufacturers, and health care providers, mismanaged, can impact industry prof-
the industry is an important component itability through fines, recalls, additional
of the health care value chain and has a operating costs, and more regulatory
strong link to social capital. oversight. The industry also faces liabil-
ity risks from counterfeit, adulterated,
or misbranded products infiltrating the
supply chain.
154 155

Fuel efficiency The payload fuel economy. Operating costs associated l Product Description of initiatives to Operational efficiencies ll
with fuel use. lifecycle reduce the environmental from optimizing materials
Description of involvement
management impact of packaging, such usage, affecting
in efforts to reduce the Other impacts:
as use of recycled materials, cost structure.
environmental impact • Capital expenditures for
reductions in the amount
of logistics, including new technology and fleet Other impacts:
of packaging material, • Capital expenditures
involvement in the management to reduce
packaging for consolidated
EPA SmartWay program. fuel consumption for improved product
shipping, and reduction in
packaging waste.
Social capital
Description of product
Product safety Legal and regulatory fines Seizure of products and llll stewardship initiatives
and settlements associated suspension or limitation to promote take-back
with product safety and a of product sale and of products at the end
description of corrective distribution, impacting of their lifecycle.
actions implemented in revenues; and reputational Amount (by weight)
response to events. impacts, affecting of products accepted
long-term growth. for take-back.
Descriptions of efforts to
minimize health and safety Other impacts:
risks of products sold, • Penalties including Leadership and governance
including those related to warning letters, fines,
toxicity/chemical safety and mandatory recall of Corruption Description of efforts Violations of anti-corruption lll
(e.g., REACH substances products, affecting one- and bribery to minimize conflicts of laws, leading to legal and
of very high concern), time costs; and repeated interest and unethical regulatory penalties.
high abuse potential (e.g., incidents influencing business practices,
Other impacts:
Schedule II controlled risk profile including mechanisms to • Reputational impacts
substances), or delivery • Liabilities for product ensure compliance.
and regulatory actions,
(e.g., incorrect dispensing, safety related events
• Operating expenses to
Legal and regulatory fines affecting ability to
mislabeling, etc.).
and settlements associated do business and
ensure product safety
with corruption or bribery, long-term growth
including Foreign Corrupt • Record of facilitation
Counterfeit Description of methods Erosion of public llll Practices Act and False payments or
drugs and technologies used confidence and customer Claims Act violations. non-compliance resulting
to maintain traceability demand due to in higher risk premiums
of products throughout proliferation of counterfeit Description of corrective
the distribution chain and and adulterated products, actions implemented in
prevent counterfeiting. affecting market share and response to these events.
long-term growth.
Description of due
diligence process to qualify Other impacts:
suppliers of drug products • Implementation
and medical equipment of tracking systems
and devices. and other efforts to
prevent distribution
Description of process
of counterfeit products,
for alerting customers
impacting operating
and business partners
and capital expenditures
of potential or known
risks associated with
counterfeit products.
156 157
HOME BUILDERS
Environment
Employment 46.8K 66 Human capital Land use and The number of lots and Permitting delays lllll
ecological number of homes delivered and/or revocations,
Business model impacts on redevelopment sites. affecting project costs
Revenue US$62.7B 48 and innovation and profits.
Leadership The number of lots
Net income US$4.1B 42 and governance and homes delivered in Other impacts:
water-stressed regions. • Regulatory penalties and
0 5 10 15
5-year ROA 4.4% 33 compliance costs
Industry exposure Market average exposure The amount of legal • Project delays, affecting
Industry market beta 1.08 35 and regulatory fines and
timing of revenue
generation
State of disclosure Top companies (in Russell 3000)** environmental regulations. • Uncertainty about land-
% disclosure 82% 42 DR Horton Inc. Description of process to use or environmental
integrate environmental permit approval, affecting
Lennar Corp.
% boilerplate 56% 63 considerations into site risk premium
PulteGroup Inc. selection, site design, and • Reputational impacts,
*Out of 79 industries NVR Inc. site development and affecting intangible assets
Toll Brothers Inc. construction. and long-term growth
Human capital
Industry description Provisional Standard; however, boiler- Workforce The total recordable injury Operational efficiencies and l l
health and rate and fatality rate for productivity improvements
The industry develops new homes and plate language was used in over half of safety direct employees and from strong worker health
residential communities, including entries analyzed (56%). This figure is the contract employees. and safety performance.
single- and multi-family units, town- highest for any industry in the sector. Other impacts:
homes, condominiums, and mixed-used This type of reporting is common to • Regulatory penalties and
projects. Development efforts gener- address the risks and/or opportunities corrective action costs
• Liabilities from personal
ally include the acquisition of land, site from ecological and community impacts
injury litigation
preparation, construction activities, of new developments. Finally, less than • Reputation and ability
and home sales. Many companies in the half of companies analyzed provide to attract workforce
industry also offer financing services disclosure on the “Design for Resource
to individual homebuyers. Efficiency” topic.

and opportunities Demand for homes that reduce environ-
By improving the energy and water mental and social impacts is increasing,
efficiency of residential units and imple- which creates opportunities for home
menting smart environmental and social builders to differentiate themselves from
development strategies for communities, competitors, charge price premiums,
this industry can play a major role in mit- and increase revenues. Homebuilders
igating climate change-related and other may face significant fines for violating
environmental risks. The industry also environmental regulations, and they may
faces challenges in ensuring high safety also face project delays if developments
standards for construction workers. raise concerns from local communities.
Additionally, a company’s ability to pro-
State of disclosure tect worker health and safety can result
Most companies disclose information in fines, affect operating expenses, and
on several of the topics included in the impact productivity.
158 159

Business model and innovation Climate The number of lots Development concentrated lll l
change located in FEMA Special in regions prone to
Design for The number of homes Resource efficiency lll adaptation Flood Hazard Areas or severe weather, affecting
resource that obtained a certified considerations in home foreign equivalent. risk profile.
efficiency HERS® Index Score and design, affecting market Description of climate Other impacts:
average score. share and revenue growth change risk exposure • Capital expenditures
via pricing premiums and analysis, degree of to improve climate
The percentage of installed
higher home values. systematic portfolio change resiliency
water fixtures certified to EPA
WaterSense® specifications. Other impacts: exposure, and strategies • Asset write-downs
• Tax credits in certain for mitigating risks. and lost revenue due
The number of homes to physical impacts
markets for construction
delivered certified to a of climate change
and sale of energy-
multi-attribute green • Developments that
efficient residential units.
building standard. • Reputational impacts incorporate resiliency
Discussion of risks and from addressing resource considerations increase
opportunities related to constraint challenges in attractiveness of
incorporating resource specific communities properties in potentially
efficiency into home design, riskier areas, affecting
and description of how demand and selling prices
benefits are communicated
to customers.
Community Discussion of how proximity Proper planning of lll l

impacts and access to infrastructure residential communities
of new and community services serves as a differentiating
developments affect site selection and factor and impacts
development decisions. desirability of homes,
leading to greater demand
The number of lots and
and higher selling values.
homes delivered on
infill sites. Other impacts:
• Reputational impacts via
The number of homes
smart growth strategies
delivered in compact
and well-performing
developments and
communities
average density. • Reduced barriers to entry
in certain municipalities
that value urban planning
principles associated
with smart growth,
leading to stronger
long-term growth
160 161
HOTELS & LODGING
SERVICES SECTOR

Environment
Social capital
Business model
Leadership
0 5 10 15
5-year ROA 3.0% 52

% disclosure 100% 1 Marriott International Inc.
Hilton Worldwide Holdings Inc.
Wyndham Worldwide Corp.
*Out of 79 industries Hyatt Hotels Corp.
Marriott Vacations Worldwide Corp.

The Hotels & Lodging industry All companies analyzed disclose
comprises companies that provide short- information on the three topics included
term accommodation, including hotels, in the Provisional Standard. However,
motels, and inns. Businesses are often almost two-thirds of reporting is boil-
structured in one or more of the fol- erplate (60%). This result is mainly
lowing ways: direct revenue from hotel driven by extensive use of boilerplate
services, management and franchise language for the “Fair Labor Practices”
services with fee revenue from property and “Ecosystem Protection & Climate
management, or vacation residential Adaptation” topics. Disclosure on
ownership with revenue from sales of “Energy & Water Management” is rela-
residential units. tively better with a handful of companies
providing quantitative information.
The hotel industry facilitates business Substantial energy or water price
and provides support to communities increases, or supply disruptions partic-
dependent on tourism. Hotel operations ularly in water-stressed areas, can affect
depend heavily on natural capital – they operating costs. Degradation of ecosys-
are relatively resource-intensive, and tems through hotel operations, or macro
are often located in sensitive ecological trends, such as rising sea levels due to
habitats. Additionally, companies face climate change, could affect the value
challenges with protecting properties of hotel properties and future growth.
from extreme weather and rising sea Furthermore, robust labor practices
levels associated with climate change. may not only reduce worker turnover,
Hotels also rely heavily on human capital but also improve guest interactions.
for guest services, so strong labor prac-
tices are important.
163

Environment Human capital
Energy The total energy Operating costs associated lll l Fair labor The voluntary and Impacts on reputation llll
and water consumption, the with energy and water use practices involuntary employee and guest experience,
management percentage that is in operations. turnover rate for affecting revenues and
grid electricity, and lodging staff. long-term growth.
Other impacts:
the percentage that • Potential disruptions The amount of legal Other impacts:
is renewable.
to operations from and regulatory fines and • Operational disruptions
The total water disruption to energy or settlements associated with from labor unrest,
withdrawn, percentage water supply, affecting labor law violations. affecting revenues
that is recycled, and the revenues and/or • Cost structure impacts
The average hourly wage
percentage in risk premiums from pressure to
for hotel employees, by
water-stressed regions. • Capital expenditures improve wages and
region; and percentage of
for energy- and working conditions
lodging facility employees • Operational efficiencies
water-related projects
earning minimum wage.
• Value of water rights, and productivity
affecting intangible assets improvements from
• Reputational impacts, strong labor standards
affecting brand value and and lower turnover
license to operate • Operating costs related
Ecosystem The number of lodging Damage to ecosystems, lll l and retaining employees
protection facilities located in FEMA affecting tourist visits
and climate Special Flood Hazard Areas and thereby revenue and employee lawsuits
adaptation or foreign equivalent. long-term growth. • Regulatory penalties and
corrective actions costs
The number of lodging Other impacts:
facilities in or near areas • Record on ecosystem
of protected conservation protection, affecting
status or endangered license to operate and
species habitat. ability to construct new
hotels, thereby impacting
Descriptions of
market share
environmental management • Asset write-downs due
policies and practices to
to property damage from
preserve ecosystem services.
climate change impacts
for climate change
adaptation, ecosystem
protection, or
property restoration
• Higher insurance
premiums or difficulty
obtaining insurance for
coastal properties
• Operational disruptions
due to climate change,
creating one-time costs
and revenue loss
• Exposure to climate
change impacts, affecting
risk premium
164 165
HOUSEHOLD &
PERSONAL PRODUCTS
Environment
Employment 380.6K 34 Human capital Water The total water withdrawn Production disruptions ll l
management and total water consumed, that result from water
Business model and the percentage of each constraints in water-stressed
Revenue US$170.6B 28 and innovation in water-stressed regions. areas, affecting revenues
Leadership and/or risk premiums.
Net income US$11.0B 31 and governance Discussion of water
management risks and Other impacts:
0 5 10 15
5-year ROA 6.4% 13 descriptions of strategies • Operating costs associated
and practices to mitigate with water use
Industry market beta 0.71 65 those risks. • Value of water rights,
State of disclosure Top companies (in Russell 3000)** • Capital expenditures
% disclosure 48% 78 Procter & Gamble Co. to install more
efficient systems
Kimberly-Clark Corp.
Colgate-Palmolive Co.
*Out of 79 industries Estee Lauder Cos. Inc.
Avon Products Inc. Packaging The total weight of Operational efficiencies ll
**As of the date of this publication lifecycle packaging, the percentage from optimizing materials
management that is made usage and transportation,
from recycled or renewable affecting cost structure.
materials, and the
Industry description State of disclosure Other impacts:
percentage that is recyclable
This industry manufactures a wide range The industry is characterized by low or compostable.
• Customer demand
for sustainably
of goods for personal and commercial levels of disclosure with more than
Description of strategies to packaged products,
consumption, including cosmetics, house- half of entries (53%) categorized as reduce the environmental affecting revenues and
hold and industrial cleaning supplies, “No disclosure.” This figure is the high- impact of packaging market share
soaps and detergents, sanitary paper est for any industry in the sector, and is throughout its lifecycle. • End-of-life or recycling
legislation, affecting
products, household batteries, razors, and mainly driven by lack of disclosure on
product prices and
kitchen utensils. Companies in the indus- topics, such as water use and sustain- influencing market
try operate globally, selling products to able packaging. When available, most share expansion
multiple types of retailers. reporting is boilerplate (33%); this is • Regulatory compliance
costs
particularly true for disclosure on the • R&D for improved
Sustainability-related risks “Product Environmental, Health and packaging
and opportunities Safety Performance” topic. lifecycle management
Being highly consumer-facing, the
industry faces pressure to deal with Exposure to financial impact
the social and environmental impact Companies can gain market share
of the industry’s products, including in by responding quickly and efficiently
packaging and supply chains. It is also to the risk of hazardous and/or envi-
important to consider shifts in water ronmentally damaging materials and
pricing and availability – water being business practices. Self-regulatory
vital to the industry’s products. The measures can help companies avoid
industry also faces regulatory and market regulation or be first to market with new
uncertainty as the health impacts of cer- products. Many companies have also
tain chemical inputs in products become invested in decreasing the environmen-
better understood. tal burden of packaging to drive down
marginal cost and gain market share.
166 167
INDUSTRIAL MACHINERY
& GOODS
Environment
Product Revenue from products Shift in demand towards lll Market cap US$414.7B 21 Social capital
environmental, that contain REACH products with lower
health, substances of very high impacts and regulatory Human capital
and safety concern (SVHC). bans or restrictions on Employment 1.0M 8
performance certain product ingredients, Business model
Revenue from products that Revenue US$370.1B 10 and innovation
affecting revenue and
contain substances on the
long-term growth. Leadership
California Department of Net income US$19.4B 20 and governance
Toxic Substances Control’s Other impacts:
Candidate Chemicals List. • Reputational impacts, 0 5 10 15
5-year ROA 5.3% 23
affecting brand value Industry exposure Market average exposure
Discussion of process • Liabilities from Industry market beta 1.21 23
to identify and manage
legal actions
emerging materials and • R&D expenses to replace State of disclosure Top companies (in Russell 3000)**
chemicals of concern.
banned, restricted, % disclosure 60% 72 Caterpillar Inc.
Revenue from products or generally harmful
designed with green chemicals in products Deere & Co.
chemistry principles. PACCAR Inc.
*Out of 79 industries Cummins Inc.
Leadership and governance Illinois Tool Works Inc.
Environmental The amount of palm oil Environmental and social lll l
and social sourced, the percentage performance of palm oil
impacts of that is certified through the suppliers, affecting input
palm oil supply Roundtable on Sustainable costs or availability. Industry description State of disclosure
chain Palm Oil (RSPO) Book & This industry manufactures essential The industry is characterized by low
Other impacts:
Claim and Mass Balance • Production disruptions, equipment for a variety of sectors, includ- levels of disclosure, with 40% of entries
systems, and the RSPO ing construction, agriculture, energy, categorized as “No disclosure.” This
leading to lost revenue
Identity Preserved and
Segregated systems.
• Heavy reliance on palm utility, mining, manufacturing, automo- figure is the highest for any industry in
oil ingredients and a tive, and transportation. Products include the sector, and is mainly driven by lack of
them effectively, possibly diesel engines, earth-moving equipment, disclosure on sourcing, remanufacturing
resulting in higher trucks, tractors, ships, industrial pumps, design, and health and safety topics.
risk premiums and locomotives. Machinery manufactur- When available, disclosure on the topics
• Reputational impacts
ers utilize large amounts of raw materials in the Provisional Standard is typically
and rising customer
demand for responsibly for production, including primarily steel, boilerplate (36%).
sourced products, cast iron, plastics, paints, and glass.
affecting revenues and Exposure to financial impact
long-term growth Sustainability-related risks Energy efficiency and alternative energy
affecting brand value and opportunities in manufacturing can help mitigate
• Operating costs from Global challenges, such as climate change potential cost impacts from GHG reg-
palm oil supply chain and resource constraints, are shaping ulations on utilities. At the same time,
management programs the future of the industry. Industrial regulators and customers are requiring
that incorporate social
and environmental factors machines are commonly powered by more stringent emissions and fuel
fossil fuels that emit GHG emissions and efficiency performance for industrial
air pollution; therefore, opportunities machinery. Product innovation aimed
exist for fuel efficiency. Also, the sourcing at meeting these demands can therefore
of critical raw materials can result in generate competitive advantages. Also,
adverse social impacts, underscoring the materials sourcing carries reputational,
importance of strong supply chain man- regulatory, and operational risks due to
agement and transparency. conflict mineral legislation and increas-
ing supply constraints.
168 169

Energy Total energy consumption, Operating costs l l Materials The percentage of materials Sourcing and efficient use lll l
management the percentage that associated with energy use sourcing costs for products containing of key materials, affecting
is grid electricity, and in manufacturing. critical materials. input costs or availability.
the percentage that
Other impacts: The percentage of tungsten, Other impacts:
is renewable. • Capital expenditures for tin, tantalum, and gold • Production disruptions,
energy-related projects smelters within the supply leading to lost revenue
chain that are verified • Regulatory compliance
Human capital conflict-free. costs associated with
conflict minerals
A discussion of the • Reputational
Employee The Total Recordable Injury Operational efficiencies and lll management of risks
impacts, affecting
health Rate, Fatality Rate, and Near productivity improvements associated with the use
and safety Miss Frequency Rate. from strong worker health long-term growth
of critical materials and • R&D expenses for
and safety performance. conflict minerals.
alternative inputs
Other impacts: • Heavy reliance on critical
• Regulatory penalties and materials but lacking
corrective actions costs the ability to source
employee lawsuits resulting in higher
risk premiums
Fuel economy Sales-weighted fleet fuel Regulations, industry ll l

and emissions efficiency for medium- and standards, and customer
in use-phase heavy-duty vehicles. demand, influencing
revenues and market
Sales-weighted fuel efficiency
share expansion.
for non-road equipment.
Other impacts:
Sales-weighted fuel efficiency • Product recalls, creating
for stationary generators.
one-time costs; and
Sales-weighted emissions repeated recalls,
of NOx and PM for: marine influencing risk profile
diesel engines, locomotive • Regulatory penalties and
diesel engines, and other compliance costs
non-road diesel engines. • R&D and capital
expenditures for improved
fuel economy and
lower emissions
Remanu- Revenue from New sales channels for ll

facturing remanufactured environmentally conscious
design and products and customers and offerings
services remanufacturing services. of lower-cost alternatives,
expanding market share.
Other impacts:
• Lower raw materials costs
for original manufacturing
• R&D and capital
expenditures to implement
remanufacturing design
and capabilities
170 171
INSURANCE
FINANCIALS SECTOR
Environment
# of companies 96 8
Employment 1.1M 6 Human capital Environmental Probable Maximum Loss In cases of extreme lll
risk exposure (PML) of insured products weather events, significant
Business model from weather-related exposure of insured
Revenue US$806.3B 2 and innovation natural catastrophes, by properties and increased
Leadership insurance segment, type payouts to policyholders,
of event, and type of affecting profitability.
0 5 10 15 risk insured.
5-year ROA 1.3% 69 Other impacts:
Total annual losses • Impacts on reserves and
Industry market beta 0.92 51 attributable to insurance capital adequacy from
payouts from modeled large payouts
State of disclosure Top companies (in Russell 3000)** and non-modeled • Cost of capital impacts
% disclosure 62% 71 Berkshire Hathaway Inc. natural catastrophes. from effects of
catastrophic events
MetLife Inc. Description of how
% boilerplate 24% 13 environmental risks are
American International Group Inc.
*Out of 79 industries Prudential Financial Inc. integrated into both the
Allstate Corp. underwriting process for
individual contracts and the
**As of the date of this publication management of firm-level
risks and capital adequacy.
List of markets, regions,
Industry description State of disclosure and/or events for which
Companies in the Insurance industry The industry is characterized by low levels the registrant declines to
provide both traditional and nontra- of disclosure, with over a third of entries voluntarily write coverage
ditional insurance-related products. analyzed categorized as “No disclosure” for weather-related natural
catastrophe risks.
Traditional policy lines include prop- (38%). This is mainly driven by lack of
erty, life, casualty, and reinsurance. disclosure on some topics, in particular the Percentage of policies in
which weather-related
Nontraditional products include annu- integration of environmental, social, and natural catastrophe risks
ities, alternative risk transfers, and governance risks factors in investment have been mitigated
financial guarantees. Companies in the management and policies designed to through reinsurance and/or
insurance industry also engage in pro- incentivize responsible customer behav- alternative risk transfer.
prietary investments for asset-liability ior. When available, disclosure is provided Social capital
management. using a rather equal mix of boilerplate
language (24%), company-tailored narra- Plan Complaints-to-claims ratio. Customer satisfaction, l l
Sustainability-related risks tive (18%), and metrics (20%). performance
The customer retention rate.
specifically through timely
and proper handling of
and opportunities
The average number of claims and transparent
Insurance companies enable the Exposure to financial impact days from reported claim information, affecting
transfer, pooling, and sharing of risk nec- Advanced analytics and emerging risks to settlement of claims. customer retention and
essary for a well-functioning economy. from climate change, terrorism, and Description of efforts
market share.
However, insurance products can also internet and data security highlight the to provide information Other impacts:
create moral hazard, lowering incentives importance of sustainability issues in to new and returning • Reputational
customers in a clear and impacts, affecting
to improve underlying behavior and the insurance industry as customers
conspicuous manner. long-term growth
performance, while contributing to sus- may seek coverage for these new risks,
tainability impacts. Insurance companies or courts may find implied coverage.
that are able to address these and other Increased frequency and magnitude
externalities, including systemic risk and of extreme weather could expose insur-
the impact of their investment portfolios, ers to additional losses; alternatively
will likely be well positioned to protect promoting improved climate resilience
shareholder value. could help limit exposure.
172 173
INTERNET MEDIA &
SERVICES INDUSTRY
Environment
Integration of Discussion of how Return on investment l l Employment 191.3K 46 Human capital
environmental, environmental, social, portfolios, affecting
social, and and governance (ESG) profitability; primary Business model
governance factors are integrated reliance on fixed income Revenue US$148.1B 33 and innovation
risk factors in into investment of assets, including corporate Leadership
investment policy premiums. debt, particularly impacted Net income US$19.1B 21 and governance
management by ESG risks. 0 5 10 15
Discussion of the 5-year ROA 7.7% 8
investment portfolio risks
presented by climate Industry market beta 1.20 25
change, natural resource
constraints, human rights State of disclosure Top companies (in Russell 3000)**
concerns, or other broad % disclosure 82% 42 Alphabet Inc.
sustainability trends.
Facebook Inc.
Priceline Group Inc.
*Out of 79 industries Netflix Inc.
Policies Discussion of products Innovations in insurance l l Expedia Inc.
designed to or product features that policy incentives, leading
incentivize incentivize healthy, safe, to potential increases in **As of the date of this publication
responsible and/or environmentally underwriting revenue
behavior responsible actions and reductions in claims
or behavior. payments. Industry description State of disclosure
Net premiums written Other impacts: The industry comprises a diverse mix Most companies analyzed disclose
related to energy efficiency • Reputational of companies providing services, such information on several of the topics
and low-carbon technology. impacts, affecting as search engines, online games, social included in the Provisional Standard. In
long-term growth
networks, specialized online content, line with sector-wide practices, the use
Leadership and governance and services. The industry generates of boilerplate language is the most com-
revenues primarily from online advertis- mon (66%), in particular for topics, such
Systemic risk Non-policyholder liabilities. Quality, transparency, and lllll ing, on usually free content, with other as “Data Security” and “Data Privacy,
management consistency of a firm’s sources of revenue being subscription Advertising Standards & Freedom of
The notional amount
capital base, or regulatory
of CDS protection sold,
uncertainty, affecting cost fees, content sales, or sale of user infor- Expression.” Relative to other topics,
the notional amount of mation to interested third parties. disclosure on “Intellectual Property
of (or, in extreme cases,
debt securities insured
for financial guarantee,
access to) capital. Protection & Competitive Behavior” is
and the risk-in-force Other impacts: Sustainability-related risks more tailored.
covered by mortgage • Ability to absorb shocks and opportunities
guarantee insurance. from financial and In the context of an increasingly digital Exposure to financial impact
economic stress, affecting
The value of collateral
asset value and interconnected world, the industry Emerging regulations and customer
received from • Impact of liquidity ratios has enabled new models of collaboration, concerns about the use and protection
securities lending and
amount received from
on operational efficiency while providing openness and transpar- of customer data can affect reputation
and profitability ency and helping promote individual and revenues. A company’s ability to
repurchase agreements. • Client retention/
The amount of life and loss depending on rights. This creates a strong link between attract, develop, and retain talent, as
annuity liabilities that perceived risk internet companies and social capital. well as facilitate employee diversity and
can be surrendered upon • Reputational impacts, As a result, the industry must ensure fair inclusion, influences innovation. Lastly,
request within three months affecting license business practices and compliance with IP protection has implications both for
without penalty, or at any to operate and
time with penalties lower long-term growth emerging regulations, in particular with innovation and competition, while data
than 20%. respect to data privacy and security, to center energy and water use affects costs.
protect its license to operate.
174 175

Environment Data security The number of data Reputational impacts lllll

security breaches and and ability to combat
Environmental Total energy consumption, Operating costs associated ll l percentage involving cyberattacks, affecting
footprint the percentage that with energy and water use customers’ personally revenues and
of hardware is grid electricity, and in data centers. identifiable information. long-term growth.
infrastructure the percentage that Discussion of management Other impacts:
Other impacts:
is renewable. • Reputational impacts, approach to identifying • R&D and capital
Total water withdrawn, the affecting brand value and addressing data expenditures for technology
percentage that is recycled, and customer acquisition security risks. and system upgrades
and the percentage in water- and retention • Regulatory compliance costs
stressed regions. • Virtualization impacts and operational expenses
reducing energy to ensure data security
Description of the • Remediation costs,
intensity and number
integration of environmental penalties, and liabilities
of servers, lowering
considerations to strategic from customer or
planning for data regulatory action
rent payments
center needs. • Capital expenditures • High-profile data security
for energy- or breaches, affecting
water-related projects risk profile
Social capital Human capital
Data privacy, Discussion of policies Reputational impacts and lllll Employee The percentage of employees Stronger innovation and lll l
advertising and practices relating to limits on use of customer recruitment, that are foreign nationals. superior ability to cater to
standards, and behavioral advertising and data, affecting revenues inclusion, and a diverse customer base,
Employee engagement as
freedom customer privacy. and long-term growth. performance with impact on both market
a percentage.
of expression share and pricing power.
Percentage of users Other impacts: The percentage of gender
whose customer • Regulatory compliance Other impacts:
and racial/ethnic group • Reputation
information is collected costs and operational and ability
representation for executives
for secondary purposes, expenses to ensure privacy to attract employees
and for all others. • Operating costs related
and the percentage who • Remediation costs,
have opted-in. penalties, and liabilities to recruiting, developing,
from customer or and retaining employees
The amount of legal • Operating risks from
regulatory action
and regulatory fines and • Exposure of data privacy recruiting foreign workers
customer privacy.
risk profile Leadership and governance
Number of government or • Potential revenue at risk
law enforcement requests for operations in countries Intellectual The number of patent Adverse legal or regulatory ll ll
for customer information where privacy and property litigation cases, the number rulings related to anti-trust
and the percentage resulting freedom of expression are protection and successful, and the number and IP, affecting market
in disclosure. less protected competitive as patent holder. share and pricing power.
The list of countries where behavior
The amount of legal Other impacts:
core products or services and regulatory fines and • Liabilitiesand one-time
are subject to government- settlements associated with expenses from anti-trust
required monitoring, anti-competitive practices. or IP rulings
blocking, content filtering, • Vulnerability to legal
or censoring. challenge due to strong
The number of reliance on IP and market
government requests to dominance, affecting
remove content and the risk profile
• Potential changes to
percentage compliance
with such requests. regime of IP protection
for software, affecting
risk profile
176 177
INVESTMENT BANKING
& BROKERAGE
FINANCIALS SECTOR
Environment
Social capital Human capital
Employment 370.5K 35 Human capital Employee Discussion of variable Incentives that encourage lll
incentives and compensation policies risk-taking, impacting costs
Business model risk taking and practices. and investment portfolio
Revenue US$205.3B 21 and innovation performance.
Leadership The percentage of total
Net income US$39.3B 6 and governance compensation that is Other impacts:
variable for executives and • Regulatory penalties
0 5 10 15
5-year ROA 0.8% 75 all others. • Reputational
impacts, affecting
Industry market beta 1.23 21 The percentage of variable
long-term growth
compensation that is
State of disclosure Top companies (in Russell 3000)** equity for executives and
all others.
% disclosure 72% 64 JPMorgan Chase & Co.
The percentage of
Goldman Sachs Group Inc.
% boilerplate 8% 3 employee compensation,
Morgan Stanley which includes ex-post
*Out of 79 industries Raymond James Financial Inc. adjustments for executives
LPL Financial Holdings Inc. and all others.
**As of the date of this publication The number of instances
when risk limits were
breached; and number
Industry description of the topics included in the Provisional and percentage by
The industry underwrites, originates, Standard: the highest figure for any position reduced, risk limit
temporarily increased, risk
and maintains markets for clients issuing industry in the sector. Quantitative limit permanently increased,
securities. Firms may also offer advisory disclosure is generally available for and/or other.
services, act as principals in buying governance-oriented topics, such as
or selling securities, and help facilitate “Systemic Risk Management.” However, Employee The percentage of Stronger investment llll
inclusion gender and racial/ethnic performance, innovation,
corporate mergers and acquisitions. lack of disclosure is prevalent for top- group representation for and superior ability to cater
ics, such as “Employee Inclusion” and executives and all others. to a diverse customer base,
Sustainability-related risks “Integration of Environmental, Social affecting market share.
and opportunities and Governance Risk Factors in Advisory, Other impacts:
Investment banks continue to face Underwriting, and Brokerage Activities.” • Liabilitiesfrom
global regulatory pressure to reform discrimination lawsuits
and disclose aspects of business that con- Exposure to financial impact to attract employees
tributed to the financial crisis in 2008. The industry has faced periods of • Operating costs related
Specifically, firms are facing new capital regulation and deregulation in response to recruiting, developing,
requirements, stress testing, limits on to financial crises or economic expan- and retaining employees
proprietary trading, and increased scru- sions. Governance structures must
tiny of compensation practices. Strict therefore evolve to comply with regula-
and evolving regulations coupled with tions and lessen impacts on operating
complex and often interconnected lines costs. Companies must also ensure
of business elevate the importance that policies and practices are in place
of strong governance in the industry. to address the risks and new reporting
requirements associated with systemic
State of disclosure risk. Finally, employee diversity and
Disclosure by the companies analyzed appropriate compensation struc-
is characterized by a relatively high tures are key for value creation in this
use of metrics (54%) across several highly-skilled industry.
178 179

Business model and innovation Systemic risk The results of stress tests Quality, transparency, and lllll
management under adverse economic consistency of a firm’s
Integration of Discussion of how Reputational impacts and llll scenarios, including the capital base, or regulatory
environmental, environmental, social, and new market opportunities, following measures (actual uncertainty, affecting cost
social, and governance (ESG) factors affecting market share and and projection): loan losses; of capital.
governance are incorporated into core long-term growth. losses, revenue, and net
Other impacts:
risk factors products and services. income before taxes; Tier 1 • Ability to absorb shocks
Other impacts: common capital ratio; Tier 1
in advisory, from financial and
The amount of • Portfolio performance for
capital ratio and total risk-
underwriting, economic stress, affecting
sustainability-focused proprietary investments, based capital ratio; and
and brokerage asset value
services, activities, and affecting asset value Tier 1 leverage ratio.
activities • Impact of liquidity ratios
products, broken down • Liabilities from litigation
by origination, market related to omission of The Base III Liquidity on operational efficiency
making, and advisory material information Coverage Ratio (LCR). and profitability
and underwriting. on products or failure • Reputational impacts,
The net exposure to written
to incorporate in affecting license
The deal size of advisory credit derivatives.
advisory services to operate and
and underwriting Level 3 assets: total long-term growth
transactions for companies value and percentage
in the following sectors/ of total assets.
industries: Energy/Oil & Gas,
Materials/Basic Materials, The skewness and kurtosis
Industrials, and Utilities. of trading revenue.
Management The amount of legal Non-compliance that lllll

of the legal and regulatory fines and creates potential restrictions
and regulatory settlements associated on specific business
environment with financial industry activities, affecting market
regulation, and percentage share and revenue growth.
that resulted from
Other impacts:
whistleblowing actions. • Liabilities
from legal and
The number of inquiries, regulatory actions
complaints, or issues • Regulatory penalties and
received by the legal and compliance costs
compliance office through • Reputational impacts,
an internal monitoring affecting intangible assets
or reporting system, • Exposure to regulatory
and percentage that actions and restrictions,
were substantiated. affecting risk premium
The number of conflicts
of interest disclosed
to clients, customers,
and/or counterparties.
180 181
IRON & STEEL PRODUCERS
Environment
Employment 132.0K 56 Human capital Greenhouse The gross global Scope 1 Efforts to reduce and report ll l
gas emissions emissions and the emissions, as well as the
Business model percentage covered under direct price on carbon,
Revenue US$73.1B 47 and innovation a regulatory program. affecting operating and
Net income (-US$1.8B) 76 and governance Description of long-
and short-term strategy Other impacts:
0 5 10 15
5-year ROA 0.6% 76 or plan to manage • Emissions reduction,
Scope 1 emissions, possibly improving
Industry market beta 1.47 6 emissions reduction targets, operational efficiency
and analysis of performance and generating net
State of disclosure Top companies (in Russell 3000)** against those targets. cost savings
% disclosure 80% 47 • Emissions reduction
Nucor Corp.
United States Steel Corp.
% boilerplate 29% 14 business uncertainty and
Reliance Steel & Aluminum Co. risk premiums
*Out of 79 industries Steel Dynamics Inc. • Revenue opportunity from
AK Steel Holding Corp. sale of carbon credits
Industry description State of disclosure Air quality Air emissions for the Operational efficiencies, l l
Steel producers make iron and steel Most companies analyzed disclose following pollutants: leading to a lower cost
products, such as flat-rolled sheets, information on several of the topics CO, NOX (excluding N2O), structure over time.
pipes, and stainless steel products, from included in the Provisional Standard. SOX, particulate matter
Other impacts:
(PM), manganese (Mn),
their own mills. Some companies own Disclosure quality is evenly mixed lead (Pb), volatile organic
• Permitting delays and/
foundries to cast iron and steel prod- between boilerplate language (29%), tai- or revocations and
compounds (VOCs),
regulatory penalties
ucts, and they typically purchase iron lored narrative (21%), and metrics (30%). and polycyclic aromatic • Capital expenditures
and steel from other firms. The industry Quantitative disclosure is common for hydrocarbons (PAHs).
also includes metal service centers and environmental topics, such as energy and technology
wholesalers. waste management. However, the indus-
try typically lacks relevant disclosure
Sustainability-related risks on water and supply chain topics.
Energy The total purchased Operating costs l l
management electricity consumed and associated with energy
and opportunities the percentage that was use in production.
Steel production provides the e ssential Exposure to financial impact renewable.
Other impacts:
building blocks of modern society. This industry uses large amounts of The total fuel • Capital expenditures for
Innovations in the industry are creating natural capital inputs, such as energy, consumption, and the energy-related projects
percentage that comes • Energy supply risk,
lighter, more durable products, enabling water, iron ore, and coal feedstock in the
from coal, natural gas, affecting cost of capital
environmental efficiency in other production process with potential for renewable sources.
sectors. High recycling rates and new cost and supply volatility. The industry’s
technologies are reducing the need for negative environmental impacts, such
extracting virgin materials. However, as GHG emissions and air pollution, can
steel production remains resource-in- affect operating costs due to regulations.
tensive, and given growth in production, Innovation leading to increased recy-
companies will need to continue reduc- cling, collection, and sale of valuable
ing their environmental impacts. by-products can lower company risk pro-
file. Finally, operational safety is key to
improve productivity, and reduce opera-
tional, regulatory, and litigation risks.
182 183

Water The total fresh water Production disruptions that ll l Leadership and governance
management withdrawn, the percentage result from water constraints
that is recycled, and the in water-stressed areas, Supply chain Discussion of the process Sourcing and efficiency use ll l
percentage from affecting revenues management for managing iron ore and/ of key materials, affecting
water-stressed regions. and/or risk premiums. or coking coal sourcing risks input costs or availability.
Other impacts: arising from environmental
Other impacts:
• Operating costs associated and social issues. • Production disruptions,
with water use leading to lost revenue
• Value of water rights, • Companies unable
affecting intangible assets to source key materials
• Capital expenditures to effectively, possibly
install more efficient systems leading to higher
• Regulatory penalties and risk premiums
compliance costs
affecting license to operate
Waste The amount of waste Operational efficiency and l l

management from operations, the cost structure impacts from
percentage that is recycled, waste handling.
Other impacts:
hazardous. • Regulatory penalties,
remediation liabilities, and
compliance costs
handling hazardous waste
• Sales of valuable by-products
Human capital
Workforce The Total Recordable Injury Operational efficiencies and llll

health, safety Rate (TRIR), Fatality Rate, productivity improvements
and well-being and Near Miss Frequency from strong worker health
Rate for full-time employees and safety performance.
and contract employees.
Other impacts:
• Liabilities from worker
litigation
• Reputation and ability to
attract employees
184 185
LEISURE FACILITIES
SERVICES SECTOR
Environment
Employment 167.2K 50 Human capital Energy The total energy Operating costs l l
management consumption, percentage associated with energy
Business model that is grid electricity, use in operations.
Revenue US$33.4B 60 and innovation and percentage that
is renewable. • Potential disruptions
to operations from
0 5 10 15
5-year ROA 1.3% 70 disruption to energy
supply, affecting revenues
% disclosure 90% 23 Live Nation Entertainment Inc. Social capital
Regal Entertainment Group
Service Corp. International Customer and The customer fatality rate Regulatory or legal actions lllll
worker safety and injury rate. due to safety violations,
*Out of 79 industries AMC Entertainment Holdings Inc.
affecting liabilities.
Cinemark Holdings Inc. Employee Total Recordable
Injury Rate and Near Miss Other impacts:
**As of the date of this publication Frequency Rate. • Reputational impacts,
affecting brand value and
The percentage of facilities
market share
inspected for safety and the
Industry description State of disclosure • Regulatory penalties and
percentage of facilities that
The Leisure Facilities industry The industry is characterized by high failed inspection.
remediation costs
• Capital expenditures on
comprises companies that operate enter- levels of disclosure across both topics
equipment maintenance
tainment, travel, and leisure facilities in the Provisional Standard. However, and system upgrades
and services. Companies in this indus- the majority of this disclosure is boiler- • Operating expenditures
try operate amusement parks, movie plate (70%) –the highest figure for any on employee training and
other safety measures
theaters, ski facilities, sports stadiums, industry in the Services sector. Not all
and leisure clubs. The industry mainly companies provide disclosure on the
generates revenue by providing live “Energy Management” topic. On the
or digital entertainment to millions of other hand, all companies analyzed rec-
guests annually. ognize the materiality of the “Customer
& Worker Safety” topic, with some even
Sustainability-related risks providing tailored narrative.
and opportunities
The industry provides consumers with Exposure to financial impact
a source of entertainment, relaxation, Leisure facilities companies are exposed
and health and fitness. However, safety to financial impacts from their use of
incidents at facilities can lead to con- energy and exposure to accidents. Cost
sumer and employee injuries and even savings can be achieved through energy
death. Additionally, companies operate efficiency, as well as energy source
large buildings and spaces that use sig- optimization. Additionally, failure to
nificant amounts of energy. Companies implement and effectively manage a cul-
have identified opportunities for energy ture of safety can lead to consumer and
efficiency that will help reduce their employee injuries, impacting reputation
GHG emissions and save costs. and revenues, and creating liability risks.
186 187
MANAGED CARE
HEALTH CARE SECTOR

Environment
Social capital
Business model
Leadership
0 5 10 15
5-year ROA 4.6% 31

% disclosure 81% 44 UnitedHealth Group Inc.
Anthem Inc.
Aetna Inc.
*Out of 79 industries Humana Inc.
Cigna Corp.

The managed care industry offers health Most companies analyzed disclose
insurance products for commercial, information on the topics included in the
Medicare, and Medicaid members. For Provisional Standard. A bit over a third
commercial customers, managed care of disclosure entries analyzed (35%) are
companies pay for health care benefits boilerplate. Compared to other indus-
in return for premiums. Companies tries in the Health Care sector, the use
also provide administrative services and of metrics is relatively high, in particular
network access for self-funded insurance for topics, such as “Access to Coverage”
plans. and “Improved Outcomes.”

and opportunities Recent increases in health insurance
The Managed Care industry provides enrollment levels create demand for
a necessary public good, as evidenced services in the industry; however, they
by recent legislative efforts that have also change the overall health of the pool
focused on increased access to and of enrollees. The operating expenses
affordability of health care services. The of companies in the industry are closely
need to navigate these trends and main- linked to the health of their customers, so
tain strong relationships with health care the industry stands to gain from effective
providers, amid increased enrollment health, wellness, screening, and preven-
levels of previously uninsured custom- tion programs. Moreover, an increased
ers and an aging population, create a regulatory and societal focus on health
strong link between the industry and outcomes and plan literacy (and trans-
social capital. parency) affects demand for services and
industry growth.
189

Climate Description of the strategy An increase in covered l ll Improved The percentage of Improvements in the l l
change to manage climate-related medical expenses, as a outcomes enrollees in wellness overall health of enrollees,
impacts on risks such as changes to result of changing climate programs by type: diet and lowering covered
human health the geographic incidence, conditions and disease nutrition, exercise, stress medical costs while
morbidity, and mortality of migration, impacting cost management and mental increasing margins.
illnesses and diseases. of revenue and other health, smoking or alcohol
operating expenses. cessation, or other.
Total coverage for
Social capital preventive health services
with no cost sharing for
Access to The Medical Loss Ratio (MLR), An expanding pool of l the enrollees, including
coverage which is the medical costs insured individuals, and that which is required by
as a percentage of premium the implementation of the Patient Protection and
revenue. innovative solutions Affordable Care Act.
and pricing structures,
The rebates accrued and Total coverage for
presenting revenue-
rebates paid due to non- preventive health services
generating opportunities
compliance with Section requiring cost-sharing by
with impacts on
2718 of the Patient Protection the enrollee, including the
market share.
and Affordable Care Act for percentage of the cost
Medical Loss Ratio. Other impacts: of services covered by
• Additional operating
The percentage of proposed the registrant.
expenses for
rate increases receiving “not Percentage of enrollees
implementing
unreasonable” designation receiving Initial Preventive
new solutions and
from Health and Human Services Physical Examination
pricing structures
(HHS) review or state review. or annual wellness visit.
The number of
Customer Legal and regulatory fines and Violations of privacy llll customers receiving care
privacy and settlements related to Health regulations, affecting
technology Insurance Portability and liabilities and leading to from Accountable Care
standards Accountability Act of 1996 fines and penalties. Organizations or enrolled
(HIPAA) Privacy and Security in Patient-Centered
Other impacts: Medical Home programs.
Rules violations, or The Health • Reputational impacts
Information Technology for
and ability to combat
Economic and Clinical Health
cyberattacks and
(HITECH) Act violations.
ensure data privacy,
Description of corrective affecting revenues and
actions implemented in long-term growth
response to these events. • Capital expenditures
for technology and
Discussion of implementation
system upgrades
of technology and • Regulatory compliance
management standards to
maintain security, privacy, and
expenses to ensure data
availability of customer data.
privacy and security
Number of breaches of • High-profile data security
customer data security, breaches, impacting
including the number of HIPPA- remediation costs and
mandated breach notifications. affecting risk profile
190 191
MARINE TRANSPORTATION
Environment
Plan The Mean Medicare Quality impacts reputation l l Employment 6.2K 77 Human capital
performance Advantage plan rating for and demand for policies,
each of the following plan affecting revenues and Business model
types: HMO, local PPO, long-term growth. Revenue US$12.9B 70 and innovation
regional PPO, PFFS, and SNP. Leadership
The enrollee retention rate
0 5 10 15
by plan type. 5-year ROA 1.0% 73
The percentage of Industry market beta 1.42 8
claims denied that were
appealed by customers and State of disclosure Top companies (in Russell 3000)**
ultimately reversed.
% disclosure 88% 27 Teekay Corp.
The grievance rate per
Kirby Corp.
10,000 enrollees. % boilerplate 60% 71
Matson Inc.
Overseas Shipholding Group Inc.
Pricing The JD Power & Impacts on enrollment via l l *Out of 79 industries
transparency Associates members’ increased transparency Scorpio Tankers Inc.
and plan rating on “Information and plan literacy, affecting **As of the date of this publication
literacy and Communication.” revenues and market share.
Descriptions of policies and
practices related to clarity Industry description State of disclosure
in pricing and coverage, The industry provides deep-sea, coastal, Most companies analyzed provide
including health care
literacy programs. and river-way freight shipping services. disclosure on the topics in the
Key activities include transportation Provisional Standard; however, the use
of containerized and bulk freight, such of boilerplate is the highest in the sector
as consumer goods and a wide range of (60%), in particular for risks related to
commodities, along with transportation fuel use and ecological impacts. Tailored
of chemicals and petroleum products reporting is common for the “Accident
in tankers. Companies operate under & Safety Management” topic while
diverse legal and regulatory frame- only a handful of companies disclose
works globally. on “Business Ethics.”

and opportunities Global regulations are addressing the
As one of the most efficient modes industry’s air emissions and biodiver-
of transportation, shipping drives eco- sity effects, incentivizing companies to
nomic activity. Yet, its growth and global mitigate these impacts to manage costs.
footprint drive its sustainability perfor- Meanwhile, accidents can lead to high
mance. Shipping generates significant social and environmental costs, while
emissions and can affect marine life. putting the efficiency of marine opera-
Companies face inherent risks operat- tions at risk. Rising marine traffic and
ing in countries with high corruption climate change are increasing hazards at
levels. Operating on the high seas brings sea and at ports, heightening the impor-
safety concerns, and accidents can be tance of safety management.
costly in terms of the environment and
human life.
192 193

Environmental The gross global Scope 1 Operating costs associated lll l Business ethics The number of calls Violations of anti-corruption lllll
footprint of emissions. with fuel use. at ports in countries laws, leading to legal and
fuel use that have the 20 lowest regulatory penalties.
Description of long- and Other impacts:
rankings in Transparency
short-term strategies to • Capital expenditures for Other impacts:
International‘s Corruption • Reputational impacts
manage Scope 1 emissions, new technology and
Perception Index.
emissions reduction targets, fleet management to and regulatory actions,
and performance against reduce fuel consumption The amount of legal affecting ability
those targets. and emissions and regulatory fines and to do business and
• Regulatory penalties settlements associated with long-term growth
The total energy consumed,
and compliance costs bribery or corruption. • Record of facilitation
the percentage from heavy
associated with air payments or non-
fuel oil, and the percentage
emissions compliance resulting
from renewables. • Growth opportunities and in higher risk premiums
Air emissions for the market expansion from
following pollutants: NOX, reducing total emissions Accidents The number of serious Poor safety records, lllll
SOX, and particulate matter. for customers and and safety marine incidents. affecting cost of capital.
offering more competitive management
The Energy Efficiency The lost time injury rate. Other impacts:
rates due to fuel savings
Design Index (EEDI) for • Operational risks from
• Liabilities
from regulatory
new ships. The number of
relying on specific and legal actions
Conditions of Class or • Regulatory penalties
fuel types, impacting Recommendations.
risk premiums and remediation costs
The number of port state • Lost revenue due
control deficiencies and to detention at
Ecological Shipping duration in Violations of environmental ll number of detentions. port following
impacts marine protected areas regulations, in particular
safety inspections
and areas of protected those related to ballast • Loss of assets and
conservation status. water, leading to fines and
one-time costs from
penalties.
The percentage of fleet high-magnitude,
implementing ballast water Other impacts: low-probability events
exchange and percentage • Regulatory bans on • Operating costs related to
implementing ballast operating in certain labor and safety standards
water treatment. ports or routes, or lost employee hours
affecting revenues and • Capital expenditures for
long-term growth equipment upgrades
volume of spills and releases • Operating expenditures • Reputational
to the environment.
for ballast, bilge, and impacts, affecting
waste water management long-term growth
• Capital expenditures to
install new technology
194 195
MEAT, POULTRY & DAIRY

Environment
# of companies 8 61
Social capital
Business model
Leadership
0 5 10 15
5-year ROA 4.9% 29

% disclosure 72% 63 Tyson Foods Inc.
Hormel Foods Corp.
Pilgrim’s Pride Corp.
*Out of 79 industries Dean Foods Co.
WhiteWave Foods Co.

The industry produces raw and processed Disclosure levels are low for some
animal products, including meats, eggs, topics (e.g., “GHG Emissions” and
and dairy products, for human and animal “Animal Care & Welfare”), but high for
consumption. Key activities include ani- others (e.g., “Food Safety” and “Land Use
mal raising, slaughtering, processing, and & Ecological Impacts”). When available,
packaging. The industry sells products and in line with sector-wide practices,
primarily to the processed foods industry, most reporting is boilerplate (55%). Use
as well as to intermediaries that distrib- of metrics is low, save for a few examples
ute finished products to key end markets, on environmental topics.
including restaurants, livestock and pet
feed consumers, and grocery retailers. Exposure to financial impact
Concerns over the industry’s use of
Sustainability-related risks antibiotics, hormones, concentrated
and opportunities animal feeding operations, and geneti-
The industry’s operations require signif- cally modified feed can impact demand
icant amounts of energy, water, and land, and profitability. Rising protein demand
which can generate externalities, such as worldwide is increasing the industry’s
GHG emissions, water stress, and ecolog- resource requirements; and regulation
ical impacts. The industry must straddle and climate change could lead to higher
two major objectives: supplying protein costs or unstable supplies of these
products cheaply to a growing global resources. Environmental externalities
market and maintaining its license to from operations create regulatory and
operate through sustainable operations. operating risks, while contaminated food
Companies also face regulations and products can harm human health, affect-
shifting consumer demand over public ing sales and reputation.
health issues like antibiotic use and ani-
mal welfare concerns.
196 197

Environment Water The total water withdrawn Production disruptions ll l

withdrawal and total water that result from water
Greenhouse Gross global Scope 1 Efforts to reduce and report l l consumed, along with constraints in water-stressed
gas emissions emissions. emissions, as well as the the percentage of each in areas, affecting revenues
direct price on carbon, water-stressed regions. and/or risk premiums.
affecting operating and Discussion of risks Other impacts:
short-term strategy or
capital expenditures. associated with water • Operating costs associated
plan to manage Scope 1
emissions, emission- Other impacts: withdrawal and description with water use
reduction targets, and an • Emissions reduction, of strategies and practices • Reduction or translocation
analysis of performance possibly improving to mitigate those risks. of herds due to low water
against those targets. operational efficiency and availability, creating
generate net cost savings one-time costs and
• Emissions reduction affecting cost structure;
efforts, possibly lowering asset write-downs for
business uncertainty and related facilities
risk premiums • Value of water rights
• Revenue opportunity from affecting, intangible assets
sale of carbon credits or • Capital expenditures
of captured methane to install more
• Potential impact on efficient systems
permits for setting up or • Reputational impacts,
expanding facilities affecting license
to operate
Energy Total energy consumption, Operating costs l l
management the percentage that is grid associated with energy Land use and The number of incidents of Impacts on animal lllll
electricity, and percentage use in operations. ecological non-compliance with water- productivity,
that is renewable. impacts quality permits, standards, affecting volume of
Other impacts: and regulations. saleable products.
energy-related projects Discussion of risks Other impacts:
• Potential energy supply associated with water • Waste emission permit
disruptions, affecting discharges and description delays and/or revocations,
risk profile of strategies and practices affecting production
to mitigate those risks. • Regulatory penalties and
compliance costs for
The amount of animal litter
waste or air emissions
and manure generated, • Capital expenditures
and the percentage of it
to meet regulatory
managed according to a
requirements and install
nutrient management plan.
The percentage of pasture • Reputational impacts,
and grazing land managed affecting license
to Natural Resources to operate
Conservation Service (NRCS)
Conservation Plan criteria.
Animal protein production
from concentrated animal
feeding operations.
198 199

Social capital Animal care The percentage of pork Reputational impacts, lll
and welfare produced without the use affecting demand and
Food safety The number of recalls Reputational impacts or lllll of gestation crates. market share.
issued and total weight regulatory import bans, The percentage of cage-free Other impacts:
of products recalled. affecting demand and shell egg sales. • Operating cost
market share. impacts from changing
Global Food Safety Initiative The percentage of
audit conformance: major Other impacts: animal care and
production certified
non-conformance rate • Food product recalls welfare regulations
to a third-party animal • Capital expenditures
and associated corrective and safety incidents, welfare standard.
action rate, and minor creating one-time costs; to change animal
non-conformance rate and repeated incidents, raising methods
and associated corrective influencing risk profile
action rate. • Liabilities for Leadership and governance
compensating customers
The percentage of supplier
facilities that meet the
• R&D and capital Environmental The percentage of Environmental and social ll l
expenditures for safety and social livestock from suppliers performance of suppliers,
Global Food Safety
standards and supply impacts of implementing NRCS affecting animal input costs
Initiative requirements.
chain traceability animal supply Conservation Plans or or availability.
Discussion of markets • Operational efficiency chains the equivalent.
that ban imports of the and cost structure Other impacts:
registrant’s products. impacts from supply The percentage of • Production disruptions,
chain traceability contract producers in leading to lost revenue
water-stressed regions. • Heavy reliance on certain
key animal inputs but a
Human capital The percentage of supplier
and contract production
Workforce The total recordable injury Strong worker health l l facilities verified to meet
resulting in higher
health rate and fatality rate. and safety performance, animal welfare standards.
risk premiums
and safety leading to operational Discussion of strategy to • Reputational impacts
Description of practices
efficiencies and productivity manage opportunities and rising customer
to monitor and mitigate
improvements. and risks to livestock demand for responsibly
chronic and acute
health conditions. Other impacts: supply presented by sourced products,
• Regulatory penalties and climate change. affecting revenues and
corrective actions costs long-term growth
• Liabilities from • Operating costs from
employee lawsuits animal supply chain
management programs
Business model and innovation that incorporate social
and environmental factors
Antibiotic The percentage of Reputational impacts, l l
use in animal animal production customer preferences for Environmental The percentage of Environmental performance ll l
production that receives medically antibiotic-free products, risks in animal feed sourced from of animal feed suppliers,
important antibiotics and and regulatory restrictions feed supply water-stressed regions. affecting input costs
nontherapeutic antibiotics. on use of antibiotics, chains or availability.
Discussion of strategy
affecting demand and to manage opportunities Other impacts:
market share. and risks to feed sourcing • Heavy reliance on certain
Other impacts: related to climate change. key feed inputs but a
• Regulatorypenalties for lack of ability to source
violations of restrictions them effectively, possibly
on use of antibiotics resulting in higher
risk premiums
• Operating costs from feed
programs that incorporate
environmental factors
200 201
MEDIA PRODUCTION
& DISTRIBUTION
SERVICES SECTOR
Environment
Employment 395.3K 33 Human capital Journalistic The amount of legal Regulatory or legal action lllll
integrity and and regulatory fines and due to failure to maintain
Business model sponsorship settlements associated with journalistic integrity,
Revenue US$197.9B 25 and innovation identification libel or slander. affecting liabilities.
Leadership
Net income US$27.1B 13 and governance Fact-checking expenses Other impacts:
as a percentage of news • Reputation and
0 5 10 15
5-year ROA 5.7% 18 production costs. impact on reader or
viewer trust, affecting
Industry market beta 1.00 42 Revenues from
long-term growth
embedded advertising. • High-profile scandals,
State of disclosure Top companies (in Russell 3000)** Discussion of management affecting license to
% disclosure 87% 30 Walt Disney Co. approach to assuring operate and risk
journalistic integrity premiums
Twenty-First Century Fox Inc.
% boilerplate 43% 40 of news programming • Regulatory restriction on
Time Warner Inc. related to: truthfulness, embedded advertising,
*Out of 79 industries CBS Corp. accuracy, objectivity, affecting revenues
Viacom Inc. fairness, and accountability;
independence of content
and/or transparency
of potential bias; and
protection of privacy and
Industry description State of disclosure limitation of harm.
Media production and distribution Most companies analyzed disclose
companies create content or acquire information on the three topics Media The percentage of Diversity of workforce and l l l
rights to distribute content over cable included in the Provisional Standard. pluralism gender and racial/ethnic on-screen staff, affecting
group representation broader audience appeal
or broadcast media, including enter- While most reporting is boilerplate for executives, for and therefore revenues and
tainment programs, news, music, and (43%), the use of tailored narrative professionals, and for long-term growth.
children’s programming. Companies in (40%) is also common, in particular for all others.
Other impacts:
this industry also publish books, news- the “Intellectual Property Protection Description of approach to • Reputational impacts,
papers, and periodicals; and broadcast & Media Piracy” topic. ensuring pluralism in news affecting brand value
radio and local television programming. media content. • Regulatory action,
affecting mergers and
Exposure to financial impact acquisitions and impeding
Sustainability-related risks As the gatekeepers of news and further growth
and opportunities current affairs, media companies have • Risk premiums associated
Media has the power to influence atti- the responsibility to fairly and accu- with regulatory scrutiny of
ownership concentration
tudes, beliefs, and value systems. Mergers rately present information, which can • Operating costs related
and acquisitions have resulted in most of help maintain their license to operate to recruiting, developing,
the media that society consumes as being and avoid additional regulations. By and retaining employees
owned by a handful of firms. This raises representing diverse views and values,
concerns regarding media pluralism, these companies can avoid alienating
which is essential to ensure freedom of audiences and retain broad appeal.
expression. Additionally, the internet has Additionally, new forms of content deliv-
created new media sources and methods ery and media piracy are threatening
of content delivery. In this environment, traditional business models. Companies
the industry must manage issues around that innovate to protect intellectual
access, content piracy, sponsorship, and property while expanding access to
journalistic integrity. more audiences will be better able
to expand revenues.
202 203
MEDICAL EQUIPMENT
& SUPPLIES
HEALTH CARE SECTOR
Environment
Intellectual The number of copyright IP protection practices l l l Employment 767.1K 14 Human capital
property infringement cases, that affect media
protection and number of successful cases, piracy, therefore Business model
media piracy and number of cases as lowering revenues. Revenue US$202.9B 23 and innovation
copyright owner. Leadership
Discussion of management • Loss of value of IP assets
0 5 10 15
approach to assuring • One-off costs to procure 5-year ROA 5.0% 28
IP protection. and enforce IP rights
• Liabilities and one-time Industry market beta 0.86 54
expenses from IP rulings
• Operating expenses to State of disclosure Top companies (in Russell 3000)**
protect IP % disclosure 77% 55 Danaher Corp.
• Exposure to media piracy
Abbott Laboratories
and loss of revenue, % boilerplate 40% 35
affecting risk premium Medtronic PLC
• Practices to increase *Out of 79 industries Thermo Fisher Scientific Inc.
access to content, Becton Dickinson and Co.
and long-term growth
Industry description the most common (40%), in particular

The medical equipment and supplies for social topics, such as “Affordability &
industry researches, develops, and pro- Fair Pricing” and “Ethical Marketing.”
duces medical, surgical, ophthalmic, Several companies provide quantitative
and veterinary instruments and devices. disclosures, mainly for the “Product
Products are used in hospitals, clinics, and Safety” and “Product Design & Lifecycle
laboratories, and range from disposable Management” topics.
items to specialized equipment.
Sustainability-related risks As manufacturers of medical technology,
and opportunities the industry faces challenges from com-
Recent legislation in the U.S. indicates ponent failures, manufacturing defects,
an effort to increase health insurance design flaws, off-label use and inadequate
coverage while reducing health care costs. disclosure of product-related risks, and
As an integral element in the health care information that may result in patient
system, the industry has a significant link injuries or fatalities. Any such events can
to social capital, especially as it relates to impact company sales, reputation, and
product safety and ensuring access to and profitability. This highlights the impor-
affordability of health care by an aging tance of good manufacturing practices
population. along the value chain. The industry also
relies on research and development
State of disclosure efforts to develop innovative and pro-
Over three quarters of disclosure exam- prietary medical technology; also strong
ples analyzed for this industry indicate intellectual property protections increase
that companies recognize the materiality expectations around product safety,
of the topics included in the Provisional affordability, and pricing transparency
Standard. In line with sector-wide prac- for this industry.
tices, the use of boilerplate language is
204 205

Environment Affordability The ratio of weighted Reputational impacts l l l

and fair pricing average rate of net price and increased regulatory
Energy, water, The total annual Operating costs associated l increases (for all products) oversight from steep price
and waste energy consumption with energy and water use to the annual increase increases, affecting risk
efficiency and percentage that and waste management in the U.S. Consumer profile and long-term
is renewable. in manufacturing. Price Index. growth potential.
The total water Other impacts: Descriptions of how price
withdrawals, percentage of • Capital expenditures information for each
those from water-stressed for energy-, water-, and product is disclosed to
regions, and percentage of waste-related projects customers or their agents.
process water recycled. • Potential energy and
water supply disruptions, Business model and innovation
The amount of waste,
and percentage of it that
is recycled, incinerated, Product design Description of Ability to attract new l
and landfilled. and lifecycle environmental and human customers and gain
management health considerations made competitive advantage
at different product lifecycle through the design of
Social capital
stages, and the type and resource-efficient products,
percentage of products to affecting market share.
Product safety The list of products recalled. Reputational impacts lllll which efforts apply.
and loss of sales from Other impacts:
The list of products in Descriptions of Extended • Operational efficiencies
recalls and issuance
the FDA’s MedWatch Producer Responsibility from optimizing materials
of safety warnings,
Safety Alerts for Human (EPR) initiatives to promote usage and supply chain,
Medical Products (Medical manufacturer take-back, affecting cost structure
long-term growth.
Devices) database. reuse, or proper safe • Regulatory penalties and
Other impacts: disposal at the end of compliance costs for EPR
The number of fatalities • One-time costs for the lifecycle. • R&D expenses to design
related to products as
product recalls products with lower
reported in the FDA Adverse • Liabilities from Amount (by weight) of
Event Reporting System. lifecycle impacts
product liability claims products accepted for take- • Capital and operating
and lawsuits back and reused, recycled,
expenses from EPR
• Repeated safety incidents, or donated, broken down
initiatives and product
influencing risk profile by devices and equipment
take-back programs
• R&D expenses to and supplies.
strengthen product safety
Ethical Legal and regulatory fines Violations of regulations lll
marketing and settlements associated related to false marketing Corruption Legal and regulatory fines Violations of anti-corruption lll
with false marketing claims, and off-label use, resulting and bribery and settlements associated laws, leading to legal and
including Federal Food, in liabilities. with bribery, corruption, or regulatory penalties.
Drug, and Cosmetic Act unethical business practices,
violations for off-label including violations of the • Reputational
• Regulatory penalties and impacts
marketing prosecuted under Foreign Corrupt Practices
remediation costs and regulatory actions,
the False Claims Act. Act and those associated
• Reputational impacts, affecting ability to
Description of corrective affecting brand value do business and
to physicians.
actions implemented in long-term growth
response to these events. Description of corrective • Record of facilitation
actions implemented in payments or
response to these events. non-compliance, resulting
in higher risk premiums
of off-label use of products, Descriptions of code
including mechanisms to of ethics governing
ensure compliance. interactions with health
care professionals, including
mechanisms to ensure
employee compliance.
206 207
METALS & MINING
Environment
Manufacturing The number and type Production disruptions, lllll Market cap US$87.4B 47 Social capital
and supply of FDA enforcement leading to lost revenue.
chain quality actions taken in response Human capital
Other impacts: Employment 155.5K 51
management to violations of current • Reputational
good manufacturing Business model
impacts, affecting Revenue US$57.3B 51 and innovation
practices (cGMP).
long-term growth
Leadership
The percentage of facilities • Increased regulatory Net income (-US$13.5B) 78 and governance
and Tier I suppliers oversight and supply chain
participating in third- auditing costs, affecting 0 5 10 15
5-year ROA (-0.6%) 79
party audit programs for operating expenses Industry exposure Market average exposure
integrity of supply chain • Regulatory penalties Industry market beta 1.37 10

and products. • Sourcing and efficiency
of use of key materials, State of disclosure Top companies (in Russell 3000)**
Descriptions of efforts to
possibly affecting input % disclosure 95% 11
maintain traceability within Alcoa Inc.
costs or availability
the distribution chain, • R&D expenses for Freeport-McMoRan Inc.
particularly with respect to % boilerplate 30% 17
alternative inputs Newmont Mining Corp.
wholesalers, re-packagers, • Heavy reliance on critical Southern Copper Corp.
*Out of 79 industries
and/or contract distributors.
materials and a lack of Cliffs Natural Resources Inc.
Discussions of any ability to source them
existing or projected risks effectively, possibly **As of the date of this publication
or constraints for resulting in higher
obtaining raw materials risk premiums
(or components) within Industry description State of disclosure
the supply chain. The industry is involved in extracting The industry is characterized by high
commodity, rare earth, and precious levels of disclosure across all topics in
metals, minerals, and stones; producing the Provisional Standard: only 5% of
and refining ores; quarrying stones; entries analyzed were categorized as
smelting and manufacturing metals; “No disclosure.” This is tied for the low-
and providing mining support activities. est figure in the sector. Moreover, the
Larger companies in this industry are use of metrics is high (41%), in particular
vertically integrated and operate globally. for e nvironmental- and human-capital-
related topics, such as waste and energy
Sustainability-related risks management, labor relations, and worker
and opportunities health and safety. This figure is also the
While the industry has made significant best in the sector.
strides toward improving resource effi-
ciency, its operations remain resource Exposure to financial impact
intensive. As global demand for metals Energy- and water-intensiveness can
grows, companies will need to continue impact expenses via volatile fuel costs and
reducing their environmental impacts, water scarcity. Mining processes, though
which include GHG and other air emis- largely automated, still expose workers
sions, generation of waste and hazardous to health and safety risks; and large-scale
materials, and impacts on biodiversity. mining often displaces communities
Furthermore, working conditions in the and/or affects health and environment in
industry can be hazardous and opera- the locality, which can lead to production
tions have the potential to affect local disruptions. Companies face growing
communities. international markets and competition,
emphasizing the importance of innova-
tion and productivity.
208 209

Environment Water The total fresh water Production disruptions ll ll

management withdrawn, percentage that result from water
Greenhouse The gross global Efforts to reduce and report l l that is recycled, and the constraints
gas emissions Scope 1 emissions, and emissions, as well as the percentage that is from in water-stressed areas,
the percentage direct price on carbon, water-stressed regions. and/or inadequate
that is covered under affecting operating and wastewater treatment,
a regulatory program. capital expenditures. affecting revenues and/or
non-compliance with water-
risk premiums.
Description of long- Other impacts: quality permits, standards,
and short-term strategy • Emissions reduction, and regulations. Other impacts:
or plan to manage possibly improving • Operating costs associated
Scope 1 emissions, operational efficiency and with water use and/or
emissions reduction targets, generate net cost savings wastewater treatment
and analysis of performance • Emissions reduction • Asset write-downs due
against those targets. efforts, possibly lowering to impacts on ability
business uncertainty and to operate
risk premiums • Value of water rights,
Air quality Air emissions for the Operational efficiencies, llll to meet regulatory
following pollutants: leading to a lower cost
CO, NOX (excluding N2O), structure over time. requirements, obtain
SOX, particulate matter alternative water
Other impacts: supply, and install more
(PM), mercury (Hg), lead • Permit delays and/
(Pb), and volatile organic efficient systems
or revocations and • Regulatory penalties and
compounds (VOCs).
regulatory penalties compliance costs
technology
Waste and The total weight of High magnitude ll l
hazardous tailings waste, and the loss-of-containment
materials percentage recycled. incidents, possibly
management affecting risk premiums.
Energy The total energy Operating costs l l The total weight of mineral
management consumption, percentage associated with energy processing waste, and the Other impacts:
that is grid electricity, and use in operations. percentage recycled. • Impacts on permits
the percentage to acquire and develop
Other impacts: The number of
that is renewable. new assets, limiting
• Capital expenditures for impoundments for tailings,
revenue-earning potential
energy-related projects categorized by the U.S. • Liabilities from legal or
• Energy supply risk, Mine Safety and Health
regulatory actions due to
affecting cost of capital Administration (MSHA)
improper waste disposal
hazard potential.
or loss of containment
remediation, and
compliance costs
• Increased capital
expenditures
to strengthen
waste management
infrastructure
210 211

Biodiversity Description of Access to reserves and lllll Security, The proven and probable Project delays due to permit lllll
impacts environmental management ability to acquire and human rights, reserves in or near areas issues or protests, security
policies and practices for develop new assets, and rights of of conflict. risks, and/or occupations,
active sites. affecting long-term growth. indigenous all creating additional
The proven and probable
peoples cost and delayed revenue.
The percentage of mine Other impacts: reserves in or near
Operational disruptions,
sites where acid rock • Legal liabilities indigenous land.
creating loss of revenue.
drainage is predicted to • Regulatory penalties,
Discussion of engagement
occur, where it is actively remediation, and Other impacts:
processes and due diligence
mitigated, or where it is compliance costs • Liabilities from legal and
practices with respect to
under remediation. • Operating and capital regulatory actions
human rights, indigenous
expenditures for • Ability to acquire and
The proven and probable rights, and operation in
improved environmental develop new assets, with
reserves in or near sites areas of conflict.
management potential for write-downs
with protected conservation • Reputational impacts, of existing reserves
affecting intangible assets • Increased oversight and/
species habitat.
or action from national or
international regulating
Social capital bodies with associated
compliance cost
Community Discussion of process Project delays due to lllll • Higher cost of capital
relations to manage risks and permit issues or community due to risk premiums
opportunities associated action, creating additional associated with
with community rights cost and delayed revenue. protests, security risks,
and interests. Operational disruptions, and/or occupations
creating loss of revenue. or with potential for
The number and duration
of non-technical delays. Other impacts: nationalization of assets
• Improved productivity resulting from increased
from strong community governmental oversight
relations and shared • Additional operating
value due to community costs for due
socio-economic benefits diligence procedures
• Introduction of more
stringent regulations Human capital
with associated
compliance cost Workforce The MSHA All-Incidence Operational efficiencies and llll
• Higher cost of capital health, safety, Rate, Fatality Rate, and productivity improvements
due to risk premium and well-being Near Miss Frequency Rate from strong worker health
associated with for full-time employees and and safety performance.
community opposition contract employees.
Other impacts:
or with potential for • Regulatory penalties and
nationalization of assets
resulting from increased • Liabilities from
worker litigation
212 213
MORTGAGE FINANCE
FINANCIALS SECTOR
Environment
Labor relations The percentage of active Production disruptions lll l Market cap US$89.0B 45 Social capital
workforce covered under due to labor unrest that
collective bargaining create cost increases and Human capital
agreements, broken production shortfalls, Employment 192.4K 45
down by U.S. and leading to lost revenue. Business model
foreign employees. Revenue US$42.4B 57 and innovation
Other impacts:
Leadership
The number and duration • Poor labor Net income US$5.5B 41 and governance
of strikes and lockouts. relations, creating
unanticipated wage and 0 5 10 15
5-year ROA 1.3% 71
compensation increases Industry exposure Market average exposure
Business ethics Description of the Violations of anti-corruption llll % disclosure 88% 26 FNF Group
and payments management system for laws, leading to legal and First American Financial Corp.
transparency prevention of corruption regulatory penalties. % boilerplate 53% 56
Nationstar Mortgage Holdings Inc.
and bribery throughout
Other impacts: *Out of 79 industries Stewart Information Services Corp.
the value chain. • Additional compliance Ocwen Financial Corp.
The production in countries costs
that have the 20 lowest • Reputational impacts **As of the date of this publication
rankings in Transparency and regulatory actions,
International’s Corruption affecting ability
Perception Index. to do business and Industry description State of disclosure
long-term growth The Mortgage Finance industry lends Most companies analyzed disclose
• Record of facilitation
payments or capital to individual and commercial information on the topics included
non-compliance, resulting customers with property as collateral. in the Provisional Standard; however,
in higher risk premiums Companies also offer other services, such in more than half of cases, reporting
as title and property insurance, closing is boilerplate (53%). This is the highest
and settlement activities, and valuation. figure for any industry in the sector.
In addition, mortgage finance firms own, Use of boilerplate is most common for
manage, and finance real estate related disclosure on social topics, such as
investments, such as mortgage pass- “Transparent Information & Fair Advice
through certificates and collateralized for Customers” and “Responsible
mortgage obligations. Lending & Debt Prevention.”

and opportunities Recent regulations have focused on
Mortgage lenders provide an essential improving consumer protection, trans-
public good in enabling consumers to parency, and accountability, in turn
purchase homes. However, the 2008 impacting profitability in the industry.
financial crisis and regulatory develop- Additionally, mortgage finance compa-
ments demonstrate how non-financial nies are exposed to the risk of property
forms of capital contribute to market damage associated with a changing cli-
value. The industry faces pressure to mate, which can impact the value of loan
ensure fair advice and provide transpar- portfolios and mortgage defaults levels.
ent information to customers, as well
as ensure responsible lending practices
to reduce predatory lending.
214 215

Environment Responsible The number and value of Impact on default rates l l l

lending Qualified Mortgages (QMs), and interest income,
Environmental The number and value of Risk of mortgage default l l l and debt by minority status and affecting revenues.
risk to mortgage loans in Federal due to environmental prevention income classification.
Other impacts:
mortgaged Emergency Management risks and natural hazards, The number and value of • Asset write-downs from
properties Agency (FEMA) special affecting interest mortgages of the following bad debt accumulation
flood hazard areas. income and value of types: Hybrid or Option • Riskiness of loan portfolio,
mortgage portfolios on ARM, Prepayment Penalty, affecting cost of capital
Descriptions of how
balance sheets. and Higher Rate, including • Reputational
climate change and
other environmental risks Other impacts: minority status and impacts, affecting
are incorporated into • Riskiness of loan portfolio, income classification. long-term growth
mortgage origination affecting cost of capital The ratio of amount of
and underwriting. first mortgage principal
The amount and percentage reduction to amount of
of credit risk for mortgage foreclosed mortgages.
loans that is attributable to The number of
default risk from weather- modifications, foreclosures,
related natural catastrophes, short sales, or deeds in
by geographic region. lieu of foreclosure, and
total mortgages.
Social capital
The foreclosure rate
by segment: subprime,
Transparent Description of variable Reputational impacts, llll non-subprime jumbo,
information compensation structure affecting ability to attract
and fair advice of loan originators. customers and thereby non-subprime conventional,
for customers revenue and market share and nonconventional.
The number and value
associated with fees
of mortgages issued Leadership and governance
and interest.
to minorities.
Other impacts:
The number and value • Ability to sell securitized
Management The amount of fines Violations of mortgage lll l
of mortgages provided to of the legal and settlements industry regulations,
mortgage obligations, and regulatory associated with mortgage affecting liabilities.
low or moderate-income
affecting market share environment industry regulations.
individuals/families. Other impacts:
and access to capital
The amount of fines and • Liabilities from legal and • Regulatory penalties and
settlements associated regulatory actions compliance costs
with violation of the • Regulatory penalties, • Reputational impacts,
mortgage industry compliance- and affecting intangible assets
provisions of Regulation Z corrective action costs • Exposure to regulatory
(Truth in Lending Act) actions and restrictions,
relating to communications affecting risk premium
to customers.
216 217
MULTILINE & SPECIALTY
RETAILERS & DISTRIBUTORS
Environment
# of companies 96 8
Employment 5.1M 1 Human capital Energy Total energy consumption, Operating costs ll l
Business model in retail and is grid electricity, and use in operations.
Revenue US$1.4T 1 and innovation distribution the percentage that is
renewable. • Reputational impacts,
0 5 10 15
5-year ROA 5.7% 22 to customers, affecting
market share
% disclosure 80% 51 Wal-Mart Stores Inc. Social capital
Costco Wholesale Corp.
The Home Depot Inc. Data security Discussion of management Reputational impacts lllll
approach to identifying and ability to combat
*Out of 79 industries Target Corp.
and addressing data cyberattacks, affecting
Lowe’s Cos Inc. security risks. revenues and
**As of the date of this publication long-term growth.
The number of data security
breaches, the percentage Other impacts:
that involve customers’ • Remediation costs,
Industry description State of disclosure personally identifiable penalties, and liabilities
This industry encompasses a variety Most companies analyzed disclose information, and number from customer or
of customers affected. regulatory action
of segments, including mass merchants, information on several of the topics in • Capital expenditures
department and home products stores, the Provisional Standard; however, such for technology and
warehouse clubs, and specialty distrib- reporting is generally boilerplate (50%). system upgrades
utors. Companies manage global supply This type of language is used more than • Regulatory compliance
chains to anticipate consumer demands, in the food retailing industry (44%) and
expenses to ensure
keep costs low, and keep shelves stocked. it is most common for disclosure on labor data security
and product sourcing topics. Disclosure • High-profile data security
Sustainability-related risks on “Data Security” is relatively better, breaches, affecting
risk profile
and opportunities while only a few companies provide
Large retailers wield considerable disclosure on “Workforce Diversity Human capital
buying power, which they can use not & Inclusion.”
just to secure low prices but also to Workforce The percentage of gender Superior ability to cater to a llll
ensure product safety, environmental Exposure to financial impact diversity and and racial/ethnic group diverse customer base and
inclusion representation among capitalize on new consumer
sustainability, and strong labor prac- As consumers demand more sustainable
management and all trends, with impact on
tices in company operations and supply products, retailers will benefit from higher other employees. market share.
chains. This is particularly important, standards around product selection, pack-
because the industry has low margins aging, and marketing. Energy-efficiency and regulatory fines and • Reputational impacts,
and fierce competition, and the rise cost savings can increase profitability settlements associated with affecting brand value
of social media has greatly increased while lowering companies’ environmental employment discrimination. • Liabilities from
the speed with which related publicity footprint. Further, companies can proac-
can spread. The industry is also the tively manage data security to maintain
target of many high-profile customer their reputations and prevent impacts on
data breaches. revenues. Companies can also improve
reputation and employee productivity
by ensuring fair labor practices.
218 219
NON-ALCOHOLIC BEVERAGES
Environment
# of companies 8 61
Fair labor The average hourly Reputational impacts and lllll Market cap US$382.2B 25 Social capital
practices wage and percentage of loss of customers from
in-store employees earning recurring labor issues, Human capital
minimum wage, by region. affecting revenues and/or Employment 417.0K 28
risk premium. Business model
The voluntary and Revenue US$120.0B 40 and innovation
involuntary employee Other impacts:
Leadership
turnover rate for • Operational disruptions from Net income US$14.2B 27 and governance
in-store employees. labor unrest, affecting sales
• Cost structure impacts from 0 5 10 15
The amount of legal 5-year ROA 8.0% 5
pressure to improve wages Industry exposure Market average exposure
and regulatory fines and Industry market beta 0.69 68
and working conditions
settlements associated with • Operational efficiencies and
labor law violations. State of disclosure Top companies (in Russell 3000)**
productivity improvements
from strong labor standards % disclosure 95% 12 PepsiCo Inc.
and lower turnover
• Liabilities from The Coca-Cola Co.
employee lawsuits Dr. Pepper Snapple Group Inc.
• Regulatory penalties and *Out of 79 industries Monster Beverage Corp.
corrective actions costs Coca-Cola Bottling Co. Consolidated
• Operating costs related to
recruiting, developing, and **As of the date of this publication
retaining employees
Leadership and governance Industry description State of disclosure

The industry produces a broad range of The industry is characterized by high
Product The revenue from products Sustainable products on lll beverage products, including various car- levels of disclosure across all topics in
sourcing, third-party certified to shelves help capitalize on bonated soft drinks, syrup concentrates, the Provisional Standard: only 5% of
packaging, environmental and/or social consumer trends that favor
and marketing sustainability standards. such products, affecting juices, energy and sport drinks, teas, entries analyzed were categorized as
ability to charge price coffee, and water products. Companies “No disclosure.” However, most reporting
Description of processes to
assess and manage risks
premiums and expanding partake in syrup manufacturing, market- is boilerplate (58%). This type of lan-
market share. ing, bottling operations, or distribution. guage is used more than in the Alcoholic
and/or hazards associated
with chemicals in products. Other impacts: Beverages industry (48%), and it is most
• Reputational impacts
Description of strategies to Sustainability-related risks common for disclosure on supply chain
on brand value
reduce the environmental • Benefits to inventory and opportunities risks. Relatively speaking, disclosure on
impact of packaging. As consumer demand shifts to low-calorie health-, nutrition-, and water-related
management if products
meet consumer expectations options, companies are adapting and topics is more tailored.
on sustainability developing healthier products. The indus-
• Operational efficiencies
from optimizing packaging try also faces increasing regulations due Exposure to financial impact
materials usage and to concerns over the health implications Availability and pricing of energy and
logistics, affecting of many of its products and their packag- water impact industry operating costs.
cost structure ing, marketing, and labeling. Additionally, A company’s performance in the areas
• Influence on supplier
sustainability practices, the industry’s reliance on energy, water, of health and nutrition, labeling, and
possibly enabling and raw ingredients requires companies marketing can affect both sales and rep-
purchase at lower costs to consider improving efficiency in man- utation. Moreover, the industry is well
due to efficiencies in ufacturing and distribution, managing positioned to implement sustainable
supplier operations
• Operating cost impacts energy and water use, and mitigating envi- packaging while reducing waste streams
through changes to ronmental and social sourcing risks. and lowering costs. Finally, supply chain
sourcing practices and management strategies to mitigate social
marketing expenditures and environmental externalities may
to promote products with
sustainability attributes avoid production disruptions.
220 221

Environment Product The number of child Violations of regulations llll

labeling and advertising impressions related to deceptive
Energy and Operational energy Operating costs associated l l marketing and the percentage of marketing and labeling
fleet fuel consumption, the with energy use impressions that promote practices, affecting
management percentage that is in operations. products meeting the liabilities.
grid electricity, and Children’s Food and
the percentage that Beverage Initiative Uniform • Reputational impacts,
is renewable. Nutrition Criteria.
energy-related projects affecting brand value
Fleet fuel consumption and fleet management The revenue from products • Consumer demand,
and the percentage that is • Potential energy supply labeled as containing affecting market share
renewable. disruptions, affecting genetically modified • Regulatory bans and
risk profile organisms, and those actions on GMOs,
labeled as non-GMO. affecting ingredient
Water The total water withdrawn Production disruptions lll l sourcing and cost
Notices of violations
management and total water consumed, that result from water of revenue
received for non-
and percentage of each in constraints conformance with
water-stressed regions. in water-stressed areas regulatory labeling and/or
and/or inadequate marketing codes.
Discussion of water
management risks and The amount of legal
description of management and regulatory fines and
risk premiums.
strategies and practices to settlements associated
mitigate those risks. Other impacts: with labeling and/or
• Operating costs associated marketing practices.
wastewater treatment Business model and innovation
Packaging The total weight of Operational efficiencies l l
lifecycle packaging, the percentage from optimizing materials
to meet regulatory
management that is made usage and transportation,
materials, and the
percentage that is recyclable • End-of-life
compliance costs or recycling
or compostable.
• Reputational impacts, legislation, affecting
affecting license Description of strategies to product prices and
to operate reduce the environmental influencing market
impact of packaging share expansion
Social capital throughout its lifecycle. • Regulatory compliance
costs
• R&D for improved
Health and The revenue from zero- Customer demand for lllll packaging
nutrition and low-calorie, no-added- healthier beverages, and
sugar, and artificially regulatory bans or taxes, lifecycle management
sweetened beverages. affecting sales.
Description of the process Other impacts:
to identify and manage • Reputational impacts,
products and ingredients affecting brand value and
of concern and emerging long-term growth
dietary preferences. • Liabilities from litigation
related to adverse
health effects
• R&D and capital
expenditures for new
product development
222 223
OIL & GAS - EXPLORATION
& PRODUCTION
Disclosure Financial Value Rank*
topic What’s measured? Value drivers impact Environment
Human capital
Environment The percentage of beverage Environmental and social lll l Employment 223.0K 41
and social ingredients sourced from performance of suppliers,
Business model
impacts of water-stressed regions. affecting input costs and innovation
ingredient or availability. Revenue US$522.9B 5
The suppliers’ social and Leadership
supply chains and governance
environmental responsibility Other impacts: Net income (-US$108.4B) 79
audit conformance: major • Production disruptions,
non-conformance rate leading to lost revenue 5-year ROA 3.8% 39
and associated corrective • Heavy reliance on certain
action rate, and minor key ingredients but a Industry market beta 1.27 20
Top companies (in Russell 3000)**
non-conformance rate lack of ability to source
and associated corrective them effectively, possibly State of disclosure
Exxon Mobil Corp.
action rate. resulting in higher % disclosure 77% 56 Chevron Corp.
risk premiums. Occidental Petroleum Corp.
The list of priority beverage • Reputational impacts
ingredients and discussion % boilerplate 34% 24 EOG Resources Inc.
and rising customer
of sourcing risks due *Out of 79 industries ConocoPhillips
demand for responsibly
to environmental and
sourced products, **As of the date of this publication
social considerations.
long-term growth
• Operating costs from
programs that Industry description State of disclosure
incorporate social and Exploration & Production (E&P) Most companies analyzed disclose
environmental factors companies explore, extract, or pro- information on several of the topics
duce energy products (such as crude in the Provisional Standard. While the
oil and natural gas) both on- and off- biggest share of disclosure is provided
shore, along the upstream operations using boilerplate language (34%),
of the oil and gas value chain. E&P is the use of company-tailored narrative
a capital-intensive industry, character- (24%) and metrics (19%) is also com-
ized by high-risk, high-return activities. mon. Disclosure on “GHG emissions”
Although E&P companies play a vital is mixed, with half of entries being boil-
role in creating technological advances erplate, and another half using either
that ensure increased access to oil and tailored-narrative or metrics. Only a few
gas reserves, they continue to face a companies provide disclosure relevant
variety of challenges. to the reserves valuation topic.

and opportunities E&P companies use natural capital inputs,
Climate change, resource constraints, which could lead to higher costs due to
and human health issues could lower environmental pressures, such as climate
the demand for E&P outputs or lead to change. Regulations to limit negative envi-
higher costs or unstable supply. These ronmental and social externalities that
realities, along with associated regulatory E&P activities generate (including GHG
action, motivate the industry to improve emissions, pollution, and disruptions to
technology and business operations local communities) could lower demand
while deterring any negative impacts to for or induce supply constraint of E&P
human health or the environment. companies’ outputs; they could also lead
to uncertainty around the value of oil and
gas reserves.
224 225

Environment Water The total fresh water Production disruptions lll l

management withdrawn, percentage that result from water
Greenhouse Gross global Scope 1 Efforts to reduce and report ll l that is recycled, percentage constraints
gas emissions emissions, percentage emissions, as well as the that is from water-stressed in water-stressed areas
covered under a regulatory direct price on carbon, regions. and/or inadequate
program, and percentage affecting operating and wastewater treatment,
Volume of produced water
by hydrocarbon resource. capital expenditures. affecting revenues and/or
and flowback generated;
risk premiums.
Amount of gross global Other impacts: the percentage discharged,
Scope 1 emissions from • Emissions-reduction injected, and/or recycled; Other impacts:
combustion, flared efforts, possibly lowering and the hydrocarbon • Operating costs associated
hydrocarbons, process business uncertainty and content in discharged water. with water use and/or
emissions, directly risk premiums wastewater treatment
Percentage of hydraulically • Adverse impact to value
vented releases, and • Capture and
fractured wells for which
fugitive emissions/leaks. sale of methane, of unconventional oil and
there is public disclosure
increasing revenues gas reserves
Description of long- and of all fracturing fluid • Value of water rights,
short-term strategy or chemicals used.
plan to manage Scope 1 Percentage of hydraulic • Capital expenditures
emissions, emissions fracturing sites where to meet regulatory
reduction targets, and an ground or surface water requirements and install
analysis of performance quality deteriorated more efficient systems
against those targets. compared to a baseline. • Regulatory penalties and
compliance costs
Air quality Air emissions for NOX Operational efficiencies, ll l
(excluding N2O), SOX, leading to a lower cost
volatile organic compounds structure over time.
Biodiversity Description of Access to reserves and lllll
impacts environmental management ability to acquire and
(VOCs), and particulate policies and practices for develop new assets,
Other impacts:
matter (PM). • Permitting delays active sites. affecting long-term growth.
and/or revocations and The number and aggregate Other impacts:
regulatory penalties volume of hydrocarbon • Regulatory penalties and
spills, volume in Arctic, compliance costs
to install best-in-class volume near shorelines • Delays/denials of
technology with ESI rankings 8-10, and drilling and operational
volume recovered. permit issuance
• Remediation costs
Proved and probable • Legal liabilities
reserves in or near sites • Operating and capital
with protected conservation
expenditures for
improved environmental
species habitat.
management
• Adverse impact to
company reputation and
intangible assets
226 227

Social capital Security, Proved and probable Project delays, due to lllll
human rights, reserves in or near areas permit issues or protests,
Community Discussion of process Project delays due lllll and rights of conflict. security risks, and/or
relations to manage risks and to permitting issues or of indnous occupations, creating
Proved and probable
opportunities associated community action, creating peoples additional cost and delayed
reserves in or near
with community rights additional cost and delayed revenue. Operational
indigenous land.
and interests. revenue. Operational disruptions, creating loss
disruptions, creating loss Discussion of engagement of revenue.
The number and duration processes and due diligence
of revenue. Other impacts:
of non-technical delays. practices with respect to
Other impacts: • Liabilities from legal and
human rights, indigenous
• Improved productivity regulatory actions
rights, and operation in • Ability to acquire and
from strong community areas of conflict.
relations and shared value develop new assets,
due to community resulting in the potential
socio-economic benefits for write-downs of
• Introduction of more existing reserves
stringent regulations • Increased oversight
with associated and/or action from
compliance cost national or international
• Higher cost of capital regulating bodies
due to risk premiums with associated
associated with compliance cost
community opposition • Higher cost of capital
or with potential for due to risk premiums
nationalization of assets associated with
resulting from increased protests, security risks,
governmental oversight and/or occupations
or with potential for
nationalization of assets
resulting from increased
• Additional operating
costs for due
diligence procedures
Business ethics Proved and probable Violations of anti-corruption llll

and payments reserves in countries laws, leading to legal and
transparency that have the 20 lowest regulatory penalties.
rankings in Transparency
Other impacts:
International‘s Corruption • Additional compliance
Perception Index.
costs
Description of the • Reputational impacts
management system for and regulatory actions,
prevention of corruption affecting ability to
and bribery throughout do business and
the value chain. long-term growth
• Record of facilitation
payments or
non-compliance,
resulting in higher
risk premiums
228 229
OIL & GAS - MIDSTREAM
Environment
# of companies 7 63
Health, Total Recordable Injury Rate, Operational risk lllll Market cap US$121.4B 41 Social capital
safety, and Fatality Rate, and Near Miss perceptions, affecting cost
emergency Frequency Rate for: full- of capital. Human capital
management time employees, contract Employment 30.2K 69
Other impacts:
employees, and short- • Loss of assets and Business model
service employees. Revenue US$43.1B 55 and innovation
one-time costs from
Leadership
Process Safety Events (PSE) high-magnitude, Net income (-US$763.5M) 75 and governance
rates for Loss of Primary low-probability events
Containment (LOPC) • Production downtime 0 5 10 15
5-year ROA 1.3% 68
of greater consequence or reduced Industry exposure Market average exposure
(Tier 1). capacity operations, Industry market beta 1.51 4

affecting revenues
Discussion of management • Legal or regulatory action, State of disclosure Top companies (in Russell 3000)**
systems used to integrate
resulting in liabilities % disclosure 93% 18
a culture of safety and • Regulatory penalties and
Kinder Morgan Inc./DE
emergency preparedness ONEOK Inc.
compliance, as well as % boilerplate 58% 67
throughout the value Williams Cos Inc.
chain and throughout • Reputational impacts, Targa Resources Corp.
*Out of 79 industries
the exploration and
affecting ability to Spectra Energy Corp.
production lifecycle.
expand operations and
attract employees **As of the date of this publication
• Frequent incidents,
resulting in lower
workforce productivity Industry description monopoly conditions which, in turn,
The industry is involved in the transpor- increase regulatory oversight.
Reserves Sensitivity of hydrocarbon Adverse impact to valuation l l l tation or storage of natural gas, crude
valuation reserve levels to future for oil and gas assets, oil, and refined petroleum products. State of disclosure
and capital price projection scenarios resulting from regulatory
expenditures that account for a price on action to limit greenhouse Midstream natural gas activities involve The industry is characterized by high
carbon emissions. gas emissions. gathering, transporting, and processing levels of disclosure across all topics in the
Estimated carbon Other impacts: natural gas from the wellhead; and the Provisional Standard: Only 8% of entries
dioxide emissions • Reduction in demand for storage, pipeline transport, shipping, liq- analyzed were categorized as “No disclo-
embedded in proved oil and gas, resulting in uefaction, and regasification of liquefied sure.” This is the lowest figure for any
hydrocarbon reserves. adverse impact to return natural gas (LNG). Midstream oil activ- of the Oil & Gas industries that are part
on capital invested
Discussion of how price and • Increased cost of capital ities, meanwhile, involve transport of of this sector. However, most reporting
demand for hydrocarbons crude oil and refined products via pipes is boilerplate (58%); in particular for
due to credit rating
and/or climate regulations
influence the capital
downgrades and pumping stations, as well as trucks, environmental and safety-related topics.
expenditure strategy for rail cars, and tanker ships or barges.
exploration, acquisition, and Exposure to financial impact
development of assets. Sustainability-related risks Companies rely on community support
and opportunities for operations, including pipeline rights-
Management Amount of political Long-term public and l l l
of the legal campaign spending, political support, affecting As an important component in the of-way. Accidental leaks and explosions
and regulatory lobbying expenditures, social license to operate oil and gas value chain, the industry from the extensive hydrocarbon
environment and contributions to tax- and intangible assets. is impacted by growing regulatory and transport networks can affect compa-
trade associations.
Other impacts: public concerns over climate change. nies’ social license to operate through
• Regulatory uncertainty, Additionally, increased attention is being biodiversity and community impacts.
Five largest political, affecting risk profile of
lobbying, or tax-exempt industry or company paid to enhanced conservation of eco- The release of GHGs and other harmful
group expenditures. systems, as well as safety of oil and gas pollutants can also affect this license, as
activities after several high-profile acci- well as operating costs through increas-
dents and spills. High barriers to entry ingly stringent emissions regulations.
and capital expenditures create natural
230 231

Greenhouse The gross global Scope 1 Operational efficiencies, lllll Competitive The amount of legal Regulatory action that ll ll
gas and other emissions, and the leading to a lower cost behavior and regulatory fines and impacts ability to expand
air emissions percentage covered under structure over time. settlements associated operations and to charge
a regulatory program. with federal pipeline and higher prices, affecting
Other impacts:
storage regulations. market share and
Description of long- • Additional costs, including
revenue growth.
and short-term strategy capital and operating
or plan to manage expenditures to reduce Other impacts:
Scope 1 emissions, emissions, as well as direct • Adverse legal or
emissions reduction price on carbon emissions regulatory rulings,
targets, and an analysis • Emissions reduction creating liabilities or
of performance against efforts, possibly lowering one-time expenses
those targets. business uncertainty and • Vulnerability to legal
risk premiums challenges,
Air emissions for the • Regulatory penalties influencing risk profile
following pollutants: NOX
(excluding N2O), SOX,
volatile organic compounds Operational The number of reportable Operational risk lllll
(VOCs), and particulate safety, pipeline incidents, perceptions, affecting
matter (PM). emergency percentage significant. cost of capital.
preparedness,
The number of accident Other impacts:
and response
Ecological Description of Inefficient environmental ll ll releases and non-accident • Loss of assets and
Impacts environmental management management policies and releases (NARs) from one-time costs from
policies and practices for violations of environmental rail transportation. high-magnitude,
active operations. regulations, impacting low-probability events
Discussion of management • Reduced capacity
access to new project
The percentage of land systems used to integrate
sites and delaying project operations,
owned, leased, and/or a culture of safety and
approvals or completion. affecting revenues
operated within areas of emergency preparedness • Legal or regulatory action
protected conservation Other impacts: throughout the value chain
resulting in liabilities
status or endangered • Regulatory penalties, and project lifecycles. • Regulatory
species habitat. remediation, and
compliance costs
compliance costs • Reputational impacts,
Terrestrial acreage disturbed • Liabilities from
and the percentage of affecting ability to expand
legal actions
impacted area restored. • Operating and capital
operations, and thereby
long-term growth
The number and aggregate expenditures for
volume of hydrocarbon improved environmental
spills, including the management or pursuit of
volume of spills in Arctic, alternative options
the volume in Unusually • Reputational impacts,
Sensitive Areas (USAs), and affecting intangible assets
the volume recovered.
232 233
OIL & GAS - REFINING
& MARKETING

Environment
Social capital
Business model
Leadership
0 5 10 15
5-year ROA 7.1% 9

% disclosure 83% 38 Valero Energy Corp.
Phillips 66
Marathon Petroleum Corp.
*Out of 79 industries World Fuel Services Corp.
Tesoro Corp.
Industry description in the Provisional Standard. Quantitative

The industry consists of the downstream reporting is used in more than a third of
operations of the oil and gas value chain. entries analyzed (35%), the highest figure
Companies are involved in refining and for any of the Oil & Gas industries that
marketing petroleum products or oper- are part of the sector. However, the use of
ating gas stations. Product and input boilerplate language is also common, in
types influence the intensity of sustain- particular for environmental topics, such
ability impacts. as “GHG Emissions”, “Air Quality,” and
“Water Management.”
New global threats, such as climate R&M companies use natural capital
change, water scarcity, and resource con- inputs, such as energy, water, and crude
straints, have emerged in recent years, oil feedstock, in the refining process.
increasing regulatory and public atten- Resource efficiency can help avoid higher
tion to industry operations. Key topics costs and unstable supply of these inputs
include GHG and other air emissions, caused by environmental pressures such
water use, hazardous materials use, and as climate change and water scarcity. The
operational and employee safety. The refining process, operation of gas sta-
products of this industry have come tions, and refined product use all create
under pressure, and companies are look- negative environmental externalities,
ing to improve product specifications including GHG emissions, as well as air
and introduce clean fuel blends to reduce and/or water pollution. Regulations to
environmental impacts. limit these externalities could lower the
demand for or constrain the supply of
State of disclosure R&M companies’ outputs.
Most companies analyzed disclose
information on several of the topics
235

Environment Hazardous The amount of waste Operational efficiency and l l

materials from operations, the cost structure impacts
Greenhouse The gross global Scope 1 Efforts to reduce and report lll l management percentage that is recycled, from using and disposing
gas emissions emissions and the emissions, as well as the and the percentage that is of hazardous waste
percentage covered under direct price on carbon, hazardous. and materials.
a regulatory program. affecting operating and capital The number of Other impacts:
expenditures. underground storage tanks • Regulatory penalties,
short-term strategy or Other impacts: (USTs), number of UST remediation liabilities, and
plan to manage Scope 1 • Emissions reduction, possibly releases requiring cleanup, compliance costs
emissions, emissions improving operational and the percentage in • Perceived operational risk,
reduction targets, and an efficiency and generate net states with UST financial affecting cost of capital
analysis of performance cost savings assurance funds. • Capital expenditures for
against those targets. • Emissions reduction efforts, handling and storing
possibly lowering business hazardous materials
uncertainty and risk premiums • Impact on access to
• Revenue opportunity from permitting due to waste
sale of carbon credits generation, UST record,
• Potential impact on and/or remediation
permits for setting up performance, with
or expanding facilities associated impact to
revenue-earning potential
Air quality Air emissions for the Operational efficiencies, leading llll
following pollutants: NOX to a lower cost structure over Business model and innovation
(excluding N2O), SOX, time.
particulate matter (PM),
Other impacts:
Product Percentage of Renewable Environmental regulations lllll
H2S, and volatile organic • Permitting delays
specifications Volume Obligation (RVO) focused on traditional
compounds (VOCs). and clean fuel met through production fossil-fuel based products
and/or revocations,
blends through renewable fuels and competitiveness of
The number of refineries affecting production
and through purchase of non-fossil fuel alternatives,
in or near areas of • Regulatory penalties and
“separated” renewable affecting market share.
dense population. compliance costs
identification numbers (RIN).
• Capital expenditures Other impacts:
to install best-in-class The total addressable • Impact to capacity
control technology market and share of market utilization due to
• Liabilities due to legal challenges for advanced biofuels and regulatory mandates
from the local population, associated infrastructure. for renewable fuels
businesses, or regulators • R&D and capital
expenditure and/or
Water The total fresh water Production disruptions ll l operating costs related to
management withdrawn, the percentage that result from water new products or blends
that is recycled, and the constraints in • Legal liabilities and
percentage in water- water-stressed areas, and/or regulatory penalties
stressed regions. inadequate wastewater • Impact to cost of capital
treatment, affecting revenues based on risks/advantages
The number of incidents of associated with company’s
and/or risk premiums.
non-compliance with water innovation performance
quality permits, standards, Other impacts:
and regulations. • Operating costs associated
• Capital expenditures to meet
regulatory requirements and
install more efficient systems
compliance costs
236 237
OIL & GAS - SERVICES
Environment
Health, The Total Recordable Injury Operational risk llll Employment 474.1K 21 Human capital
safety, and Rate (TRIR), Fatality Rate, perceptions, affecting
emergency and Near Miss Frequency cost of capital. Business model
management Rate for full-time employees Revenue US$176.3B 27 and innovation
Other impacts:
and contract employees. • Loss of assets and
Leadership
Net income (-US$7.5B) 77 and governance
Process Safety Event (PSE) one-time costs from
0 5 10 15
rates for Loss of Primary high-magnitude, 5-year ROA 3.5% 43
Containment (LOPC) of low-probability events
greater consequence (Tier 1) • Production downtime Industry market beta 1.37 12
and lesser consequence or reduced
(Tier 2). capacity operations, State of disclosure Top companies (in Russell 3000)**
affecting revenues % disclosure 73% 61 Schlumberger Ltd.
The Challenges to Safety • Legal or regulatory action
Systems indicator rate Halliburton Co.
resulting in liabilities % boilerplate 57% 65
(Tier 3). • Regulatory penalties Baker Hughes Inc.
Discussion of measurement and compliance and *Out of 79 industries National Oilwell Varco Inc.
of Operating Discipline corrective action costs Weatherford International PLC
and Management System • Reputational impacts,
Performance through affecting ability to
Tier 4 Indicators. expand operations and
attract employees
• Frequent incidents, Industry description State of disclosure
resulting in lower Oil and gas services companies pro- Around three quarters of disclosures
workforce productivity vide support services (such as seismic analyzed indicate that companies recog-
surveying and well cementing), man- nize the materiality of the topics in the
Pricing The amount of legal Regulatory action that lllll ufacture or rent rigs and equipment, Provisional Standard. However, the use
integrity and and regulatory fines and impacts the ability to
transparency settlements associated charge higher prices, or are contract drillers for oil and gas of boilerplate language is common (57%);
with price fixing or affecting market share and exploration and production (E&P) this is the highest figure for any of the
price manipulation. revenue growth. companies. Oil & Gas industries that are part of this
Other impacts: sector. Boilerplate is extensively used
• Adverse legal or Sustainability-related risks to report on topics, such as “Emissions
regulatory rulings,
creating liabilities or and opportunities Reduction Services,” “Chemicals
one-time expenses The industry has played a vital role Management,” and “Business Ethics &
• Adverse impact in technological advances that have Payments Transparency.”
to reputation and increased access to oil and gas assets,
intangible assets
• Vulnerability to legal contributing to energy independence, Exposure to financial impact
challenges, possibly particularly in the U.S. However, global More stringent environmental
influencing risk profile threats, such as climate change, water regulation could affect future oil and
scarcity, and resource constraints, are gas production and, in turn, demand for
Management The amount of political Long-term public and l l l driving greater public concern and reg- oilfield services. Innovation to reduce
of the legal campaign spending, political support, affecting
and regulatory lobbying expenditures, social license to operate ulatory action around the sustainability the environmental and social impacts of
environment and contributions to tax- and intangible assets. performance of E&P companies, in turn oil and gas extraction can therefore be a
Other impacts: affecting the sustainability profile of oil driver of business growth and long-term
trade associations. • Regulatory uncertainty, and gas services companies. competitiveness. Furthermore, corpo-
The five largest political, affecting risk profile of rate oversight of process safety, business
ethics, and the industry’s regulatory
group expenditures.
influence can reduce operating risks.
238 239

Emissions Total fuel consumption, Strong portfolio of lll l Business ethics The amount of net Violations of anti-corruption lllll
reduction the percentage that emissions management and payments revenue in countries laws, leading to legal and
services is renewable, and the services, leading to transparency that have the 20 lowest regulatory penalties.
and fuels percentage used in on-road enhanced reputation, rankings in Transparency
Other impacts:
management equipment and vehicles and market share, and International’s Corruption • Additional compliance
in off-road equipment. long-term growth. Perception Index.
costs
Description of strategy Other impacts: Description of the • Reputational impacts
or plans to address air • Capital and operating management system for and regulatory actions,
emissions-related risks, expenditures to meet new prevention of corruption affecting ability to
opportunities, and impacts. regulatory requirements and bribery throughout do business and
• Operational efficiency and the value chain. long-term growth
The percentage of engines • Record of facilitation
cost structure impacts
in service that meet Tier 4
from fuel management payments or non-
compliance for non-road
and emissions reduction compliance, resulting in
diesel engine emissions.
higher risk premiums
Water The average volume of Reduced water use and/or ll Health, The Total Recordable Injury Operational risk ll ll
management water used per volume of increased recycling of
safety, and Rate (TRIR), Fatality Rate, perceptions, affecting
services gas or oil extracted by fresh water, resulting in increased
emergency Near Miss Frequency Rate, cost of capital.
water and recycled water. revenue-generation
management and Total Vehicle Incident
potential, as well as Other impacts:
Description of strategy Rate (TVIR) for full-time • Safety
reduced risks in meeting record, affecting
or plans to address water employees, contract
E&P demand for services. market share
consumption and disposal- employees, and • Legal or regulatory action,
related risks, opportunities, Other impacts: short-service employees.
resulting in liabilities
and impacts. • R&D expenses to
Discussion of management • Regulatory penalties, and
introduce new water
systems used to integrate compliance and corrective
management services
a culture of safety and action costs
emergency preparedness • Reputational impacts,
Chemicals The average amount of Curtailment of business ll l throughout the value chain affecting ability to
management hydraulic fracturing fluid activities due to increased and project lifecycles. expand operations and
and proppant consumed disclosure requirements attract employees
per volume of gas or for chemicals used during • Frequent incidents,
oil extracted. drilling/completion resulting in lower
activities, adversely workforce productivity
The percentage of
impacting revenues.
hydraulically fractured wells
for which there is public Other impacts: Management The amount of political Long-term public and l l l
disclosure of all fracturing • Liabilities
from legal and of the legal campaign spending, political support, affecting
fluid chemicals used. regulatory actions and regulatory lobbying expenditures, social license to operate
• R&D expenses for environment and contributions to tax- and intangible assets.
Description of strategy
development of less exempt groups, including
or plans to address Other impacts:
harmful materials used trade associations. • Regulatory
chemical-related risks, uncertainty,
in operations
opportunities, and impacts. The five largest political, affecting risk profile of
Ecological The average disturbed Strong ecological ll l group expenditures.
impact acreage per oil and gas management record, leading
management well site. to higher pricing power,
expanded market share, and
Description of strategy or
long-term growth.
plan to address risks and
opportunities related to Other impacts:
ecological impacts from • Regulatory
penalties,
core activities. remediation liabilities,
and compliance costs
240 241
PHARMACEUTICALS
HEALTH CARE SECTOR
Environment
Employment 523.6K 18 Human capital Energy, water Total annual energy Operating costs associated l
and waste consumption and with management of waste,
Business model efficiency percentage of it that and energy and water use
Revenue US$274.7B 18 and innovation is renewable. in manufacturing.
Leadership
Net income US$36.5B 7 and governance Total water withdrawals Other impacts:
and percentage of those • Capital expenditures
0 5 10 15
5-year ROA 6.2% 16 that are in water-stressed for energy-, water-, and
regions; percentage of waste-related projects
Industry market beta 0.76 63 process water recycled. • Potential energy and
water supply disruptions,
State of disclosure Top companies (in Russell 3000)** Overall process mass
intensity (PMI), and PMI
% disclosure 81% 45 Johnson & Johnson broken down for water
Pfizer Inc. and organic solvents.
Merck & Co. Inc. Amount of waste,
*Out of 79 industries AbbVie Inc. percentage that is recycled,
Eli Lilly & Co. incinerated, and landfilled.
Social capital
Industry description in the Provisional Standard. While most Access to Description of initiatives to Access to new markets l
medicines promote access to health through innovative pricing
The industry develops, manufactures, reporting is boilerplate (33%), the use care products in priority models, affecting revenues
and markets a range of generic, over-the- of tailored narrative (28%) and metrics countries as defined by the and long-term growth.
counter, and prescription medications (20%) is also common, in particular Access to Medicine Index.
Other impacts:
and health care products in a highly reg- for topics, such as “Drug Safety & Side List of products on the • Reputational impacts
ulated environment. Driven by research Effects,” “Affordability & Fair Pricing,” WHO List of Prequalified
Medicinal Products.
and development (R&D), the industry and “Access to Medicines.”
depends on a highly skilled workforce Drug safety Products listed in the Reputational impacts lllll
and is characterized by a high risk of Exposure to financial impact and side FDA MedWatch Safety and loss of sales,
product failure. Clinical trial transparency influences effects Alerts for Human Medical affecting revenue.
regulatory approvals of new drugs, Products database.
Other impacts:
Sustainability-related risks impacting the industry’s growth poten- Number of fatalities • Potential litigation
and opportunities tial, while reducing risks from drug side associated with products as associated with side
reported in the FDA Adverse effects and other drug
Efforts to increase health insurance cov- effects and safety issues, which may Event Reporting System. safety-related events
erage while reducing health care costs affect revenue, reputation, and liabil- • Repeated incidents,
List of products recalled.
characterize the environment in which ities. Innovative pricing models that influencing risk profile
pharmaceutical companies operate. expand access to and improve afford- Description of product • One-time costs for drug
stewardship initiatives take-back programs
The industry requires strong intellectual ability of medicines can create growth to promote take-back • R&D expenses to
property protection to ensure returns opportunities in a highly regulated and and redistribution or safe strengthen drug safety
on R&D investments. These protections cost-conscious health care environ- permanent disposal of
create a significant link to social capital, ment in both developed and developing unused product at end of
lifecycle. Where applicable,
and an expectation that clinical trials are markets. Finally, promoting good manu- amount of direct funding
transparent, and medications are safe, facturing practices throughout the value for such initiatives;
accessible, and affordable. chain, while reducing the risks of coun- and amount of product
terfeit products, can influence product (by weight) accepted
for take-back, reuse,
State of disclosure safety and profitability. or disposal.
Most companies analyzed disclose
information on the topics included
242 243

Safety of Management process Likelihood of achieving llll Ethical Legal and regulatory fines Violations of regulations lll
clinical trial for ensuring quality and regulatory approval, marketing and settlements associated related to false marketing
participants patient safety during affecting revenue and with false marketing claims, and off-label use, leading to
clinical trials, including long-term growth. including violations for off- increased liabilities.
those conducted with label marketing prosecuted
third-party clinical research • Liabilities and increased
under the False Claims Act. • Regulatory penalties
organizations (CROs).
cost of capital for failure Description of corrective and remediation costs
Description of processes for to conduct safe and actions implemented in • Reputational impacts,
obtaining informed consent effective clinical trials response to events. affecting brand value
of incentives offered to
participants, and of any
clinical trials terminated due
of off-label use of products,
to failure to follow good
including mechanisms to
clinical practice standards.
ensure compliance.
Number of FDA clinical
investigator inspections Counterfeit Description of methods Erosion of public confidence l ll
of investigators used for drugs and technologies used and consumer demand due
clinical trials during the to maintain traceability to safety concerns and the
past year that resulted in of products throughout proliferation of counterfeit
Voluntary Action Indicated the supply chain and products, affecting revenue
(VAI) and Official Action prevent counterfeiting. and brand image.
Indicated (OAI).
Description of process Other impacts:
Legal and regulatory for alerting end customers • Implementation of
fines and settlements and business partners tracking systems and
associated with clinical of potential or known other efforts to prevent
trials in World Bank risks associated with sale of counterfeit
Low-income and Lower counterfeit products. drugs, impacting
Middle-income countries operational expenses
and UN HDI Medium-High Number (and description)
development countries that of actions that led to raids,
are not captured by the seizure, arrests, and/or filing
World Bank rankings. of criminal charges related
to counterfeit products.
actions implemented in Human capital
response to events.
Employee Description of talent Competition for talent in ll
Affordability Number of settlements Reputational impacts l l l recruitment, recruitment and retention a highly skilled industry
and fair pricing of Abbreviated New Drug and increased regulatory development efforts for scientists impacts research and
Applications (ANDA) oversight from steep and retention and other research and development efforts
litigation involving price increases, affecting development personnel. and the ability to bring
payments and/or provisions risk profile and long-term new products to market,
to delay bringing an growth potential. Training and development
affecting market share and
authorized generic product expenditures per
Other impacts: long-term growth.
to market for a defined full-time employee, by
• Liabilities from legal and (i) expenditures for industry Other impacts:
time period.
regulatory actions or professional qualification • Reputation and ability to
Ratio of weighted average and advanced industry attract employees
rate of net price increases education and (ii) by • Operating costs related
(for all products) to the all other. to recruiting, developing,
annual increase in the U.S. and retaining employees
Consumer Price Index. Voluntary and involuntary
employee turnover for
executives/senior managers,
mid-level managers,
professionals, and all others.
244 245
PROCESSED FOODS
Environment
Employee Total injury rate. Strong worker health lll Market cap US$390.2B 24 Social capital
health and and safety performance,
Days away, restricted, or
safety leading to operational Human capital
transferred rate. Employment 425.7K 25
efficiencies and productivity
Laboratory-acquired improvements. Business model
infection rate. Revenue US$155.1B 31 and innovation
Other impacts:
Leadership
• Liabilities from Net income US$13.4B 28 and governance
employee lawsuits
• Regulatory penalties and 0 5 10 15
5-year ROA 3.5% 44
corrective actions costs Industry exposure Market average exposure
• Reputation and ability Industry market beta 0.52 76
to attract employees and
expand operations State of disclosure Top companies (in Russell 3000)**
% disclosure 87% 29 Mondelez International Inc.
Kraft Heinz Co.
General Mills Inc.
Corruption Legal and regulatory Violations of anti-corruption lll *Out of 79 industries Kellogg Co.
and bribery fines and settlements laws, leading to legal and
associated with bribery, regulatory penalties. ConAgra Foods Inc.
corruption, or other
Other impacts: **As of the date of this publication
unethical business practices, • Reputational impacts
including violations of the
and regulatory actions,
Foreign Corrupt Practices
Act and those associated
affecting ability Industry description State of disclosure
to do business and Processed Foods companies process Most companies analyzed disclose
long-term growth
to physicians. • Record of facilitation and transform raw ingredients into information on several of the topics
Description of corrective payments or packaged products, such as bread, fro- in the Provisional Standard; however,
actions implemented in non-compliance, zen foods, snack foods, pet foods, and in two-thirds of cases reporting is boiler-
response to these events. resulting in higher condiments. The industry’s largest cus- plate (66%). This is the highest figure for
risk premiums
Description of code tomers include grocery stores and large any industry in the sector. Use of boil-
of ethics governing retail chains. The industry has large and erplate is common for reporting on the
interactions with health
care professionals, including complex supply chains, with ingredients food safety, product labeling and mar-
mechanisms to ensure sourced globally. keting, and supply chain topics. Relative
employee compliance. to other topics, disclosure on “Health &
Sustainability-related risks Nutrition” is more tailored.
Manufacturing Description of FDA Production disruptions, lllll and opportunities
and supply enforcement actions taken leading to lost revenue.
chain quality in response to violations of As consumers become increasingly busy, Exposure to financial impact
Other impacts:
management current good manufacturing • Reputational
innovations in processed foods provide Climate change and water scarcity are
practices (cGMP).
impacts, affecting an efficient source of key nutrients in affecting the industry’s cost and supply
Description of corrective long-term growth their diet. Regulatory and societal trends of raw materials and factors of produc-
actions implemented in • Increased regulatory suggest a rising concern over the health tion. Shifts in consumer preferences
response to these actions. oversight and supply chain
and safety of processed foods, as well due to obesity and health concerns are
auditing costs, affecting
Percentage of facilities and
operating expenses as concerns over the environmental affecting revenues and industry growth.
Tier I suppliers participating • Regulatory penalties and social impacts that result from the Likewise, evolving consumer concerns
in the Rx-360 International
Pharmaceutical Supply industry’s manufacturing and sourc- around ingredient- and food-safety
Chain Consortium audit ing of products and ingredients. The are driving regulation, with impacts
program or equivalent consumer-facing nature of the industry on competitiveness.
third-party audit programs
makes the management of key sustain-
for integrity of supply chain
and ingredients. ability issues an important driver for
long-term company success.
246 247

Energy and Operational energy Operating costs l l Food safety The Global Food Reputational impacts, lllll
fleet fuel consumption, the associated with energy Safety Initiative audit affecting demand and
management percentage of it that use in operations. conformance: major market share.
is grid electricity, and non-conformance rate
the percentage of it • Capital expenditures for
and associated corrective • Food product recalls and
that is renewable. action rate, and minor
energy-related projects safety incidents, creating
non-conformance rate
Fleet fuel consumption and fleet management one-time costs; repeated
and the percentage of • Potential energy supply incidents, influencing
action rate.
it that is renewable. disruptions, affecting risk profile
risk profile The percentage of • Liabilities for
ingredients sourced from compensating customers
Water The total water withdrawn Production disruptions ll l supplier facilities certified • R&D and capital
management and total consumed, as well that result from water to a Global Food Safety expenditures related to
as the percentage of each in constraints Initiative scheme. safety standards and
water-stressed regions. in water-stressed areas supply chain traceability
Notice of food safety • Operational efficiency
and/or inadequate violations received and
The number of incidents and cost structure
wastewater treatment, percentage corrected.
of non-compliance with impacts from supply
water quality and/or The number of recalls issued chain traceability
risk premiums.
quantity permits, standards, and total amount of food
and regulations. Other impacts: product recalled.
• Operating costs associated
management risks and
Health and The revenue from products Customer demand for lllll
description of strategies • Value of water rights,
nutrition labeled and/or marketed healthier foods, and
and practices to mitigate to promote health and regulatory bans or taxes,
those risks. • Capital expenditures
nutrition attributes. affecting sales.
to meet regulatory The revenue from products Other impacts:
requirements and install that meet Smart Snacks • Reputational impacts,
more efficient systems in School criteria or affecting brand value and
• Regulatory penalties and foreign equivalent. long-term growth
compliance costs • Liabilities from litigation
The description of the
• Reputational impacts, related to adverse
process to identify
affecting license health effects
and manage products • R&D and capital
to operate
and ingredients of
expenditures for new
concern and emerging
product development
dietary preferences.
248 249

Product The number of child Violations of regulations llll Leadership and governance
labeling and advertising impressions and related to deceptive
marketing percentage of those that marketing and labeling Environment The percentage of food Environmental and social lll l
promote products meeting practices, affecting and social ingredients sourced from performance of suppliers,
the Children’s Food and liabilities. impacts of water-stressed regions. affecting input costs
Beverage Initiative Uniform ingredient or availability.
Other impacts: The percentage of
Nutrition Criteria. • Truthfulness of labeling, supply chains
food ingredients sourced Other impacts:
The revenue from products as well as implied product that are certified to • Production disruptions,
labeled as containing attributes, affecting third-party environmental leading to lost revenue
genetically modified demand and market share and/or social standards, • Heavy reliance on certain
organisms (GMOs), and • Reputational impacts, by certification scheme. key ingredients but a
those labeled as non-GMO. affecting brand value lack of ability to source
• Regulations regarding The suppliers’ social and
The notices of them effectively, possibly
labeling, including of environmental responsibility
violations received for resulting in higher
products with GMOs, audit conformance: major
non-conformance with risk premiums
affecting marketing and non-conformance rate • Reputational impacts
regulatory labeling and associated corrective
other operating costs and rising customer
and/or marketing codes. • Regulatory bans and action rate, and minor
demand for responsibly
The amount of legal actions on GMOs, non-conformance rate
sourced products,
and regulatory fines and affecting ingredient and associated corrective
settlements associated sourcing and cost action rate.
long-term growth
with marketing and/or of revenue The list of priority food • Operating costs from
labeling practices. ingredients and discussion supply chain management
of sourcing risks due programs that
Business model and innovation to environmental and incorporate social and
social considerations. environmental factors
Packaging The total weight of Operational efficiencies ll
lifecycle packaging sourced, the from optimizing materials
management percentage that is made usage and transportation,
materials, and the
Other impacts:
percentage that is recyclable • End-of-life or recycling
or compostable.
legislation, affecting
Description of strategies to product prices and
reduce the environmental influencing market
impact of packaging share expansion
throughout its lifecycle. • R&D for improved
packaging
250 251
PROFESSIONAL SERVICES
SERVICES SECTOR
Environment
Employment 842.9K 12 Human capital Professional Descriptions of Ability to attract and lllll
integrity management approach retain customers, affecting
Business model to assuring professional market share.
Revenue US$164.4B 29 and innovation integrity and duty of care.
Net income US$9.8B 33 and governance The amount of legal • Regulatory penalties and
and regulatory fines and legal liabilities
0 5 10 15
5-year ROA 4.2% 36 settlements associated with • Reputational impacts,
professional integrity or affecting brand value
Industry market beta 1.02 39 duty of care.
Data security Discussions of management Reputational impacts lllll
% disclosure 83% 36 ManpowerGroup Inc. approach to identifying and ability to combat
Thomson Reuters Corp. and addressing data cyberattacks, affecting
% boilerplate 67% 76 security risks. revenues and
RR Donnelley & Sons Co.
long-term growth.
*Out of 79 industries Nielsen Holdings PLC Discussions of policies
Kelly Services Inc. and practices relating Other impacts:
to collection, usage, • Capital expenditures
**As of the date of this publication and retention of for technology and
customer information. system upgrades
The number of data security
Industry description State of disclosure breaches and percentage
The Professional services companies Despite a diverse mix of companies, expenses to ensure
involving customers’
data security
rely on the unique skills and knowledge over four fifths of disclosure examples confidential business • Remediation costs,
of their employees to provide services, analyzed for this industry indicate that information or personally
penalties, and liabilities
identifiable information.
such as management and administration companies recognize the materiality of the from customer or
consulting, including staffing and exec- three topics included in the Provisional regulatory action
• High-profile data security
utive search; as well as legal, accounting, Standard. However, most reporting is breaches, affecting
and tax preparation advice and informa- boilerplate (67%). This is particularly true risk profile
tion services. These services are often for disclosure on “Workforce Diversity &
provided on an assignment basis. Engagement” and “Data Security.” While Human capital
not all companies provide disclosure on
Sustainability-related risks “Professional Integrity,” when available,
Workforce The percentage of Stronger innovation and llll
diversity and gender and racial/ethnic superior ability to cater to
and opportunities such disclosure is more tailored to engagement group representation for a diverse customer base,
Human capital represents the greatest company circumstances. executives, percentage for affecting market share.
asset to companies in the industry. A all other non-contingent
Other impacts:
staff, and percentage for
diverse, highly engaged workforce con- Exposure to financial impact contingent staff.
• Reputation and
tributes to innovation and customer Companies may hold sensitive client ability to attract and
The voluntary and retain employees
empathy, even as the industry faces chal- information, making customer data pro- involuntary turnover rate. • Operating costs related
lenges in improving the proportion of tection critical to maintaining reputation to recruiting, developing,
Employee engagement
women and minorities in the workforce. and retaining clients. The industry is as a percentage.
Furthermore, professional services com- also highly dependent on retaining talent
panies work with industries that depend and fostering diversity, which contributes
on strong licenses to operate, such as to innovation and customer empathy,
utilities and financial services, therefore, thereby improving service offerings.
professional integrity issues, including Additionally, companies must meet high
avoiding conflicts of interest, preventing professional standards to protect reputa-
negligence, and ensuring data accuracy, tion and attract and retain clients.
are critical.
252 253
PULP & PAPER PRODUCTS
Environment
# of companies 4 71
Employment 19.7K 71 Human capital Greenhouse gas Gross global Additional costs, including ll l
emissions Scope 1 emissions. capital and operating
Business model expenditures to report
Revenue US$8.6B 72 and innovation Description of long- and
or reduce emissions, as
Leadership short-term strategy or
well as direct price on
Net income US$347.4M 69 and governance plan to manage Scope 1
carbon emissions.
emissions and emission-
0 5 10 15
5-year ROA 4.3% 34 reduction targets, as well as Other impacts:
an analysis of performance • Emissions reduction,
Industry market beta 1.01 41 against those targets. possibly improving
operational efficiency and
State of disclosure Top companies (in Russell 3000)** generate net cost savings
% disclosure 90% 22 • Emissions reduction efforts,
Domtar Corp.
possibly lowering business
PH Glatfelter Co.
% boilerplate 34% 24 uncertainty and risk premiums
Neenah Paper Inc. • Revenue opportunity from
*Out of 79 industries Schweitzer-Mauduit International Inc. sale of carbon credits
Industry description use of metrics (40%) and company-tai-

Air quality Air emissions of the Operational efficiencies, ll
following pollutants: NOx leading to a lower cost
Companies in this industry manufac- lored narrative (16%) across most of (excluding N2O), SOx, structure over time.
ture a range of wood pulp and paper the topics included in the Provisional volatile organic compounds,
Other impacts:
products, including pulp fiber, paper Standard. Disclosure on the “Energy particulate matter, and • Permit delays and/or
hazardous air pollutants.
packaging and sanitary paper, office Management” and “Fiber Sourcing & revocations, affecting
paper, newsprint, and paper for indus- Recovery” topics tends to be more tai- production, and regulatory
penalties (possibly
trial applications. Companies typically lored relative to other topics, with the influenced by the extent of
function as business-to-business enti- majority of companies providing quan- biomass used as a source of
ties and have international operations. titative information. On the other hand, on-site energy)
disclosure on “Water Management” and
Sustainability-related risks “Air Quality” mainly uses boilerplate control technology
and opportunities language. • Legal liabilities
The use of renewable wood fiber as a
raw material is a positive attribute for Exposure to financial impact Energy The total energy Operating costs ll
management consumption, the percentage associated with energy
the industry’s long-term development. Pulp and paper companies use large
that is grid electricity, the use in manufacturing.
However, pulp and paper products quantities of natural capital inputs, percentage that is biomass,
Other impacts:
manufacturing is resource intensive, including energy, biomass, and water. and the percentage that • Energy from on-site
and forestry and logging activities in Raw materials comprise the greatest is other renewables.
biogenic sources, possibly
the supply chain can adversely impact cost of goods sold. Increasing resource lowering risk related to
biodiversity and forest-dependent com- constraints and more stringent environ- existing GHG regulations
and favorably affecting
munities. Emerging challenges, such as mental regulation could lead to higher
cost of capital; potential
environmental degradation, are spawn- operating costs or an unstable supply for negative impacts if new
ing more stringent regulations that have of key resources. Furthermore, pulp regulations target specific
the potential to affect the industry. and paper production leads to GHG types of biomass
emissions and water effluents, creating
State of disclosure significant pollution abatement expen- • Revenues from sale of surplus
Disclosure by the companies analyzed ditures that might increase with more energy generated on-site
is characterized by a relatively high stringent regulation.
254 255
RAIL TRANSPORTATION
Disclosure Financial Value Rank*
topic What’s measured? Value drivers impact Environment
# of companies 5 69
Social capital
Water The total water withdrawn Production disruptions ll l Market cap US$141.9B 39
management and total water consumed, that result from water
and the percentage constraints in water-stressed Human capital
of each of these in areas and/or inadequate Employment 121.1K 58
water-stressed regions. wastewater treatment, Business model
and innovation
affecting revenues and/or Revenue US$48.6B 52
Discussion of water Leadership
risk premiums. and governance
management risks and Net income US$9.0B 35
description of strategies Other impacts:
and practices to mitigate • Operating costs associated 5-year ROA 6.3% 14
those risks. with water use and/or
wastewater treatment Industry market beta 1.13 30
Top companies (in Russell 3000)**
affecting intangible assets State of disclosure
Union Pacific Corp.
% disclosure 90% 21 CSX Corp.
to meet regulatory
Norfolk Southern Corp.
requirements and install % boilerplate 19% 9
more efficient systems Kansas City Southern
• Regulatory penalties and *Out of 79 industries Genesee & Wyoming Inc.
compliance costs **As of the date of this publication
Fiber sourcing The percentage of wood Revenue driver from lll l Industry description State of disclosure
and recovery fiber sourced from third- rising customer demand
party certified forestlands for certified pulp and Rail companies provide rail freight The industry is characterized by high
and the percentage paper products. shipping and support services. Key levels of disclosure across the three
per standard. activities involve shipping containerized topics included in the Provisional
Other impacts:
The percentage of wood • Recycled fiber, possibly and bulk freight, including consumer Standard: only 10% of records analyzed
fiber sourced meeting other resulting in higher goods and commodities. Rail companies were labeled as “No disclosure.” The use
fiber sourcing standards and demand but affecting
the percentage per standard. operating costs compared typically own, maintain, and operate rail of tailored narrative (33%) and metrics
to the use of virgin fiber networks. The industry is characterized (38%) is common, in particular for fuel
The amount of recycled and
recovered fiber procured.
• Supply disruption due by a low level of globalization. (Passenger and safety-related topics. The industry is
to unsustainable forestry rail transportation is mainly operated by a top performer across the 79 industries
practices of suppliers
• Reputational impacts publicly funded or owned entities in the included in the analysis.
from environmental or U.S. and is not covered here).
social externalities in the Exposure to financial impact
supply chain Sustainability-related risks Being fuel-intensive and emitting GHG
and opportunities and other air pollutants, the rail industry
Increasing focus on sustainable faces the same increasing regulatory
transportation places the rail industry pressures as the rest of the Transportation
at an advantage over other means of sector. Together with high energy costs,
transport due to its relative efficiency and this provides incentives for efficient fuel
lower emissions intensity. Nonetheless, management. Additionally, a company’s
locomotives emit GHG emissions during license to operate depends on its safety
operations. Moreover, rail companies reputation. Finally, increasing profitabil-
often transport hazardous substances. ity, recent higher rates, and differential
This increases regulatory scrutiny over rates charged to shippers are generating
accident and safety management prac- customer and regulatory attention to
tices. Regulatory attention also focuses ensure competitive business practices.
on companies’ competitive behavior
under conditions of a natural monopoly.
256 257
REAL ESTATE OWNERS,
DEVELOPERS &
INVESTMENT TRUSTS
Environment
Environmental The gross global Scope 1 Operating costs associated ll l Employment 152.8K 52 Human capital
fuel use Business model
Descriptions of long- and Other impacts: Revenue US$134.6B 36 and innovation
short-term strategy or • Capital expenditures
Leadership
plan to manage Scope 1 for new technology Net income US$25.1B 14 and governance
emissions, emissions and assets to reduce
0 5 10 15
reduction targets, and an fuel consumption 5-year ROA 2.2% 59
against those targets. • Regulatory penalties Industry market beta 0.68 70
and compliance
Total fuel consumption, State of disclosure Top companies (in Russell 3000)**
costs associated with
and the percentage
air emissions % disclosure 63% 69 Host Hotels & Resorts Inc.
of it that is renewable. • Growth opportunities and
Simon Property Group Inc.
Air emissions for the market expansion from % boilerplate 30% 17
following pollutants: NOX reducing total emissions Welltower Inc.
and particulate matter. for customers *Out of 79 industries Crown Castle International Corp.
Ventas Inc.
Leadership and governance **As of the date of this publication
Competitive The amount of legal Penalties for violations of ll ll

behavior and regulatory fines and competition regulations.
Other impacts: Companies in the industry own, develop, Compared to others in the sector, the
• Reputational impacts from
and operate income-producing real industry is characterized by low levels
price-fixing and market
manipulation, affecting estate assets. Most industry participants of disclosure, with 38% of entries catego-
market share are structured as real estate investment rized as “No disclosure.” When available,
• Increased regulatory trusts (REITs) and operate in a wide reporting on the topics included in
scrutiny, impacting ability
range of segments, including residential, the Provisional Standard is provided
to raise prices
• Record of non-compliance retail, office, health care, industrial, and using an equal mix of tailored narrative
resulting in higher hotel properties, among others. and boilerplate language (both 30%).
risk premium Disclosure on “Energy Management”
Sustainability-related risks and “Climate Change Adaptation” tends
Accidents The number of accidents Poor safety records, lllll and opportunities to be more specific to each company’s
and safety and incidents. affecting cost of capital
management Buildings use significant amounts unique circumstances.
The total recordable injury Other impacts:
rate, fatality rate, and near • Liabilities
from regulatory of natural resources, including energy
miss frequency rate. and legal actions; and and water. Regulatory and public con- Exposure to financial impact
The number of accident
remediation costs cerns over the efficient use of these Managing energy and water efficiency
• Regulatory penalties
releases and non-accident resources put pressure on the industry is important, not only to improve the
and capital
releases (NARs).
expenditures related to to improve how properties use them. environmental impacts of real estate, but
The number of Federal safety compliance However, improving efficiency in this also to increase asset valuation, reduce
Rail Administration • Operating costs related regard is a challenge, as incentives for owners’ operating costs and risk expo-
(FRA) Recommended to safety standards real estate companies and their custom- sure to evolving regulations, and meet
Violation Defects. • Loss of assets and
one-time costs from ers traditionally have not been aligned. tenant demand for sustainable buildings.
The frequency of internal Additionally, concerns surrounding the Companies are also innovating their
high-magnitude,
railway integrity inspections.
low-probability events physical impacts of climate change on contractual relations with tenants to
• Reputational
real estate portfolios are rising. integrate sustainability into their leases.
impacts, affecting
long-term growth Also, the physical impacts of climate
change can impact real estate values and
increase overall risk profiles.
258 259

Energy The energy consumption Performance and strategy lll l Management The percentage of new Impacts on asset value from lll
management data coverage as a of energy efficiency directly of tenant leases that contain a overall building resource
percentage of floor area, impact real estate rental sustainability cost recovery clause for use efficiency; impact
by property subsector. rates and occupancy rates, impacts resource efficiency-related on rent premiums and
thereby driving revenue and capital improvements and occupancy rates.
The total energy
asset values. associated leased floor area,
consumption by portfolio Other impacts:
by property subsector. • Cost savings realized by
area with data coverage, Other impacts:
the percentage that is grid • Cost savings realized The percentage of tenants owners and/or tenants
electricity, and percentage by owners and/or passed that are separately metered • Capital expenditures
that is renewable, each by on to tenants or submetered for grid aimed at improving
property subsector. • Capital expenditures electricity consumption and resource efficiency of new
on energy-related for water withdrawals, by and/or existing buildings
Like-for-like change in
projects and property subsector.
energy consumption
obtaining certifications
of portfolio area with • Exposure to regulatory
Description of approach to
data coverage, by measuring, incentivizing,
risks and compliance costs
property subsector. • Reputational
and improving sustainability
impacts of tenants.
The percentage of eligible impacts, affecting
portfolio that has obtained long-term growth
an energy rating and is Climate The area of properties Asset value impacts lll l
certified to ENERGY STAR,® change located in FEMA Special from property damage
by property subsector. adaptation Flood Hazard Areas or due to severe weather
foreign equivalent, by and flooding from rising
Description of how building property subsector. water levels.
energy management
considerations are Descriptions of climate Other impacts:
integrated into property change risk exposure • Long-term reductions in
investment analysis and analysis, degree of demand for real estate in
operational strategy. systematic portfolio high-risk areas
exposure, and strategies • Heightened operating
for mitigating risks. costs in high-risk areas
Water The water withdrawal Performance and strategy lll l • Property insurance for
management data coverage as a of water efficiency directly
weather-related damage
percentage of total floor impact real estate rental
becoming more difficult
area and percentage in rates and occupancy rates,
or expensive to obtain
water-stressed regions, each thereby driving revenue and • Capital expenditures and
by property subsector. asset values.
one-off costs to restore
The total water withdrawn Other impacts: damaged property, or for
by portfolio area with data • Cost savings realized by climate change adaptation
coverage and percentage owners and/or passed on • Climate risk exposure,
water-stressed regions, each to tenants affecting cost of capital
by property subsector. • Capital expenditures on
water-related projects
The like-for-like change • Exposure to regulatory
in water withdrawn
risks and compliance costs
for portfolio area with • Water availability risks,
data coverage, by
property subsector. • Reputational
Discussion of water impacts, affecting
management risks and long-term growth
description of strategies
those risks.
260 261
REAL ESTATE SERVICES
Environment
# of companies 9 56
Employment 143.8K 53 Human capital Sustainability Revenue from energy and Ability to capture share l l
services sustainability services. of growing market for
Business model sustainability services,
Revenue US$23.7B 65 and innovation The floor area and
and ability to attract and
Leadership number of buildings
retain clients, affecting
Net income US$1.0B 62 and governance under management
market share and
provided with energy and
0 5 10 15 long-term growth.
5-year ROA 3.0% 50 sustainability services.
Industry market beta 1.18 27 The floor area and
number of buildings under
State of disclosure Top companies (in Russell 3000)** management that obtained
an energy rating.
% disclosure 50% 77 CBRE Group Inc.
Jones Lang LaSalle Inc. Leadership and governance
% boilerplate 17% 7
Realogy Holdings Corp.
*Out of 79 industries Marcus & Millichap Inc. Transparent Brokerage revenue from Reputational impacts, lllll
Forestar Group Inc. information dual agency transactions. regulatory oversight,
and and client demand for
**As of the date of this publication Revenue from transactions
management greater transparency, all
associated with
of conflict affecting market share
appraisal services.
of interest and long-term growth.
Industry description Additionally, ensuring transparency in The amount of legal
Other impacts:
The industry provides a range of services customer relations and avoiding conflicts and regulatory fines and • Loss of professional
to real estate owners, tenants, investors, of interest is a key success factor. license from
professional integrity or
and developers. Primary services duty of care.
non-compliance
with applicable laws
include property management, broker- State of disclosure
and regulations
age, appraisal, and specialized advisory The industry is characterized by low • Liabilities from legal
and information services. Property man- levels of disclosure with 50% of entries and regulatory actions
agement services may include leasing, analyzed, categorized as “No disclosure.” • Regulatory penalties,
compliance and corrective
tenant relations, building maintenance, This figure is the highest for any industry
action costs
and building security. Many companies in the sector, and is mainly driven by
also provide brokerage services, facilitat- lack of disclosure on the “Sustainability
ing sales and leasing transactions. Services” topic. Reporting on infor-
mation transparency and conflicts of
Sustainability-related risks interest is generally provided using boil-
and opportunities erplate or tailored narrative.
On a national scale, commercial and
residential buildings have significant Exposure to financial impact
environmental and social impacts. Playing a constructive role in the
Global concerns about climate change owner-tenant relationship can drive the
and resource scarcity have placed financial implications of sustainable real
pressure on real estate owners and devel- estate, improve the resource efficiency
opers to improve resource efficiency of of properties, and create new market
properties and ensure long-term resil- opportunities. Also, if mismanaged, the
iency to a changing climate. The industry level of trust and integrity with client
is well positioned to provide advice to relationships can threaten revenues and
owners and developers while improving company reputation.
economic and sustainability outcomes.
262 263
RESTAURANTS
SERVICES SECTOR
Environment
Employment 1.7M 3 Human capital Energy The total energy Operating costs associated l l
and water consumption, the with energy and water use
Business model management percentage that in operations.
Revenue US$149.7B 32 and innovation is grid electricity,
and the percentage • Potential disruptions to
that is renewable.
operations from disruption
0 5 10 15
5-year ROA 7.9% 6 The total water to energy or water supply,
withdrawn and the affecting revenues
Industry market beta 0.69 69 percentage withdrawn • Capital expenditures
in water-stressed regions. for energy- and
State of disclosure Top companies (in Russell 3000)** water-related projects
% disclosure 88% 25 • Reputational impacts,
McDonald’s Corp.
Starbucks Corp.
Yum! Brands Inc.
*Out of 79 industries Darden Restaurants Inc.
Food and The amount of waste, Operational efficiency and ll
packaging the percentage that cost structure impacts
Chipotle Mexican Grill Inc. waste is food waste, and the from reducing food waste
management percentage that is diverted. and optimizing packaging
materials usage.
The total weight of
packaging, percentage Other impacts:
Industry description State of disclosure made from recycled • Impacts on saleable food
Companies in the Restaurants Industry Most companies analyzed disclose or renewable materials, products, affecting value
and percentage that is of assets in inventory
prepare meals, snacks, and beverages to information on the topics in the recyclable or compostable. • Regulatory penalties and
customers’ orders for immediate on- and Provisional Standard; however, such compliance costs
off-premises consumption. The industry disclosure is typically boilerplate (50%). • Additional operating
includes limited-service eating places Such language is common for reporting expenses to reduce
food waste and source
and casual or upscale family full-service on topics, such as “Nutritional Content” packaging from recycled
eating places. Fast-food restaurants and “Supply Chain Management & Food or renewable materials
represent the largest share of the Sourcing.” Disclosure on “Food Safety”
limited-service restaurants segment. is evenly split between boilerplate and Social capital
tailored narrative, while only a few com-
Sustainability-related risks panies provide disclosure on food and
Food safety The percentage of Reputational impacts that lllll
restaurants inspected by a lower customer foot traffic
and opportunities packaging waste. food safety oversight body or spending on certain
Due to their global scale and purchasing and percentage receiving items, affecting revenues
power, restaurants can influence soci- Exposure to financial impact critical violations. and market share.
etal dietary habits. Concerns around The industry relies on human capital for The number of recalls Other impacts:
obesity and other health risks, animal value creation, while facing regulatory and total amount of food • Product recalls and safety
product recalled. incidents, creating one-
welfare, and use of antibiotics in food and customer pressures to reduce social time costs; and repeated
are influencing consumer preferences and environmental externalities related The number of confirmed
incidents, influencing risk
foodborne illness outbreaks
and purchasing decisions. The industry’s to food safety, waste, and production. and percentage resulting
profile
• Regulatory penalties for
scale also creates resource challenges, These factors drive both its revenues and in CDC investigation.
food safety violations
including water and energy use, and costs. Furthermore, rising awareness • Closure of restaurant
creates food and packaging waste. of the nutritional value of food is shifting facilities due to regulatory
Furthermore, the industry is character- consumer demand and public policy action, affecting asset value
• Legal liabilities from
ized by low wages and part-time work, around GMOs, antibiotics, hormones,
customer lawsuits
and is under pressure to ensure living and pesticides in food production. • Additional capital and
wages and good working conditions for operating expenditures
the millions of people it employs. related to safety standards
264 265

Nutritional The percentage of meal Customer demand for lll Leadership and governance
content options consistent with healthier foods, affecting
the Dietary Guidelines market share. Supply chain The percentage of food Sustainably-sourced food lll
for Americans or foreign management purchased that meets and beverage items that
Other impacts:
equivalent and sales from • Reputational impacts, and food environmental and social help capitalize on consumer
these options. sourcing sourcing standards, and trends favoring such
The percentage of children’s and long-term growth the percentage that is products, affecting ability to
meal options consistent • Regulatory actions third-party certified. charge price premiums and
with national dietary restricting sales and expanding market share.
The percentage of eggs
guidelines for children or marketing of certain foods purchased from cage-free Other impacts:
foreign equivalent and sales and beverages to children, sources and the percentage • Reputational impacts
from these options. affecting revenues of pork purchased from on brand value
• Operating cost impacts gestation crate-free sources. • Benefits to inventory
The number of child
through changes to management if
advertising impressions Discussions of strategy to
sourcing practices, offered items meet
made and the percentage manage environmental
meal preparation, and consumer expectations
promoting products that and social risks within the
marketing expenditures on sustainability
meet national dietary supply chain.
to promote healthier • Sustainability issues in
guidelines for children
and more nutritious food the supply chain, possibly
or foreign equivalent.
and beverages affecting ingredient
supply and purchase costs
Human capital • Operating cost impacts
through changes to
Fair labor Voluntary and involuntary Impacts on reputation llll sourcing practices
practices employee turnover rate for and customer experience,
restaurant employees. affecting revenues and
long-term growth.
The average hourly wage
for restaurant employees, Other impacts:
by region, and percentage • Operational disruptions
of employees earning from labor unrest,
minimum wage. affecting revenues
• Cost structure impacts
The amount of legal
from pressure to
improve wages and
working conditions
labor law violations. • Operational efficiencies
The amount of tax credit and productivity
received for hiring through improvements from
enterprise zone programs. strong labor standards
and lower turnover
employee lawsuits
corrective actions costs
266 267
ROAD TRANSPORTATION
Environment
Employment 254.6K 39 Human capital Environmental The gross global Scope 1 Operating costs associated lll l
Business model fuel use
Revenue US$42.4B 56 and innovation Description of long- and Other impacts:
Leadership short-term strategies or • Capital expenditures for
Net income US$1.5B 57 and governance plans to manage Scope 1 new technology and
emissions, emissions fleet management to
0 5 10 15
Industry market beta 1.22 22 against those targets. • Potential to offer
customers new
State of disclosure Top companies (in Russell 3000)** Total fuel consumption and
carbon-neutral shipping
the percentage of it that
% disclosure 100% 1 XPO Logistics Inc. services for an increased
is renewable.
price premium
JB Hunt Transport Services Inc.
% boilerplate 10% 4 Air emissions for the • Growth opportunities and
YRC Worldwide Inc. following pollutants: NOX, market expansion from
*Out of 79 industries Swift Transportation Co. SOX, and particulate matter. reducing total emissions
Landstar System Inc. for customers and
offering more competitive
rates due to fuel savings;
reputational benefits
• Potentially unanticipated
Industry description State of disclosure regulatory penalties or
The Road Transportation industry All companies analyzed disclose infor- compliance costs due
consists of companies that provide long- mation on the three topics included in to evolving GHG and air
and short-haul freight trucking services. the Provisional Standard. Moreover, the emissions regulations
• Operational risks from fuel
Key activities include the shipment of majority of this disclosure is tailored cost volatility, impacting
containerized and bulk freight, including narrative (67%), particularly for fuel and risk premiums
consumer goods and a wide variety of safety topics. The use of metrics is also
commodities. Owner-operators comprise common, with some companies provid- Human capital
the vast majority of the industry due to ing quantitative information on both
the relative ease of entry, while a few the driver working conditions and fuel
Driver working The voluntary and Violations of employee ll l
conditions involuntary employee health and safety laws,
large operators maintain market share use topics. turnover rates for affecting liabilities and
through contracts with major shippers. all employees. leading to fines and
penalties.
Exposure to financial impact Description of approach
Sustainability-related risks The industry is under regulatory to managing short- Other impacts:
and long-term driver • Cease-and-desist
and opportunities scrutiny due to its GHG emissions and
health risks. orders against non-
Trucks provide a vital connection air pollution. This, alongside volatile complying operations,
between other modes of transport. energy prices, provides incentives for disrupting services
However, the fuel that powers the indus- efficient fuel management. Further, • Reputation and
ability to attract
try generates greenhouse gases and air safety management is important to limit
employees, addressing
pollutants. At the same time, the risks harm to the environment and society and labor shortages
and health strains of a driving job can to minimize delays and property damage. • Operating costs related
be unattractive to younger generations The industry’s use of various common to recruiting and
retaining employees
entering the workforce, creating a labor capitals like natural resources, public
problem. Furthermore, companies are infrastructure, and human capital drives
required to transport goods within lim- sustainability impacts and, consequently,
ited timeframes; this can link accidents impacts on value through regulations or
inherently with efficiency. public reaction.
268 269
SECURITY & COMMODITY
EXCHANGES
FINANCIALS SECTOR
Environment
# of companies 4 71
Accidents Number of accidents Safety ratings and records, lllll Employment 12.5K 73 Human capital
and safety and incidents. affecting demand for
management services and ability to Business model
Total recordable injury rate Revenue US$10.7B 71 and innovation
continue to conduct
and fatality rate for full-time Leadership
intermodal shipments
and contract employees. Net income US$3.2B 47 and governance
Other impacts:
Safety Measurement System 0 5 10 15
• Cease-and-desist orders 5-year ROA 2.1% 63
Behavior Analysis and Safety Industry exposure Market average exposure
against operations
Improvement Category Industry market beta 0.87 53
not in compliance,
(BASIC) percentiles for
disrupting services
Unsafe Driving, Hours- • Liabilities from regulatory State of disclosure Top companies (in Russell 3000)**
of-Service Compliance,
and legal actions % disclosure 100% 1 Nasdaq Inc.
Driver Fitness, Controlled • Regulatory penalties
Substances/Alcohol, • Loss of assets and
Intercontinental Exchange Inc.
Vehicle Maintenance % boilerplate 42% 36
one-time costs from CME Group Inc.
and Hazardous *Out of 79 industries CBOE Holdings Inc.
high-magnitude,
low-probability accidents **As of the date of this publication
Number and aggregate • Operating costs related to
volume of spills and releases labor and safety standards
to the environment. • Capital expenditures for
safety compliance
• Poor safety records, Industry description State of disclosure
affecting cost of capital Security and commodity exchanges All companies analyzed disclose infor-
operate physical or electronic market- mation on the three topics included in
places for trading financial securities, the Provisional Standard. Such disclo-
commodities, or other financial instru- sure is provided using an equal mix of
ments. In the U.S., these exchanges boilerplate and tailored narrative (both
were once mutually owned entities 42%). Relatively speaking, disclosure on
serving their broker members. However, the “Managing Business Continuity &
today these companies are publicly Technology Risks” topic is more tailored
traded for-profit entities, listed on their than the information provided on other
own exchanges. topics. Boilerplate is used extensively to
report conflict of interest risks.
This industry has traditionally played Recent trends in the regulatory
a public service role, and although environment suggest a greater focus
exchanges are for-profit companies in on transparency, risk management, and
the U.S., they continue to be looked upon market stability, affecting companies’
as public utilities with a central role in operating costs, risk premiums, and
capital markets and economic activity. growth potential. As new policies and
However, the 2008 financial crisis and market transformations encourage more
increased stakeholder scrutiny into responsible management of social capital
the exchanges’ status as self-regulatory and strong governance, exchanges that
organizations demonstrate how non- can address all forms of capital – not just
financial forms of capital contribute to financial – will be better positioned to
market value. enhance market share and strengthen
their competitive position.
270 271

Social capital Managing Description of efforts to Use of sophisticated lllll

business prevent technology errors, technology, and
Promoting Discussion of alert policy Non-discrimination, lllll continuity and security breaches, and enabling market share
transparent regarding timing and transparency, and efficient technology market disruptions. expansion; errors, security
and efficient nature of public release functioning within risks breaches, or disruptions
The number of significant
capital markets of information. the capital markets, and their reputational
market disruptions and
driving ability to capture impacts, negatively
The number and average duration of downtime.
existing and new market affecting revenues and
duration of halts related The number of data long-term growth.
opportunities and establish
to public release of security breaches and
pricing power. Other impacts:
information and pauses the percentage involving
related to volatility. Other impacts: • Operating costs for
customers’ personally
• Impacts on trading systems maintenance and
The percentage of trades identifiable information.
volume, affecting data security
generated from automated • Capital expenditures
fee-based income and
trading systems. for technology and
risk premiums
Description of policy to • Potential for regulatory system upgrades
encourage or require listed penalties from • High-impact disruptions,
companies to publicly information and possibly affecting
disclose governance, social, pricing asymmetries risk profile
and/or environmental • Reputational • Regulatory compliance
information. impacts, affecting costs related to
long-term growth data security
• Liabilities from legal and
Leadership and governance regulatory actions
Managing Descriptions of process Liabilities from regulatory lllll

conflicts of to identify and assess and legal actions.
interest conflicts of interest between
Other impacts:
the exchange’s regulatory • Regulatory penalties and
obligations and the
compliance costs
interests of its members, • Impact on reputation and
its market operations, its
customer trust, affecting
listed issuers, and, in the
market share and
case of a demutualized
long-term growth
self-regulatory organization • Exposure to regulatory
(SRO), its shareholders.
scrutiny, affecting
The amount of legal risk premiums
settlements associated
with fraud, anti-trust,
anti-competitive, market
manipulation, malpractice
or other business
ethics violations.
272 273
SEMICONDUCTORS
Environment
Employment 473.0K 23 Human capital Greenhouse gas The gross global Scope 1 Efforts to reduce and report ll l
emissions emissions and amount emissions, as well as the
Business model of total emissions from direct price on carbon,
Revenue US$199.3B 24 and innovation perfluorocompounds (PFCs). affecting operating and
Net income US$31.4B 10 and governance Descriptions of long- and
short-term strategies or Other impacts:
0 5 10 15
5-year ROA 8.6% 3 plan to manage Scope 1 • Emissions reduction,
emissions, including improving operational
Industry market beta 1.40 9 emissions reduction efficiency and generate
targets and an analysis net cost savings
State of disclosure Top companies (in Russell 3000)** of performance against • Revenue opportunity from
% disclosure 79% 52 Intel Corp. those targets. sale of carbon credits
• Denial or delay of
QUALCOMM Inc.
% boilerplate 51% 52 permits for setting up
Micron Technology Inc. or expanding fabs,
*Out of 79 industries Texas Instruments Inc. depending on the type
Applied Materials Inc. of regulation
Energy Total energy consumption, Operating costs associated l l
management in the percentage that with energy use
manufacturing is grid electricity, and in manufacturing.
Industry description disclosure typically use boilerplate the percentage that
The Semiconductors industry language (51%). Such language is most Other impacts:
includes companies that design or common for “Supply Chain Management energy-related projects
manufacture semiconductor devices, & Materials Sourcing” and human • Potential energy supply
integrated circuits, their input materials capital topics. Disclosure on “Intellectual disruptions, affecting
and components or capital equipment. Property Protection & Competitive risk profile
Some companies provide outsourced Behavior” tends to be more tailored,
manufacturing, assembly, or other ser- but there is lack of disclosure for
Water The total water withdrawn, Production disruptions ll ll
and waste percentage recycled, resulting from water
vices for designers of semiconductor “GHG Emissions.” management percentage in water- constraints
devices while several outsource or off- in stressed regions. in water-stressed areas
manufacturing and/or inadequate
shore manufacturing. Exposure to financial impact The amount of waste from
Sustainability issues in the manufactur- manufacturing, percentage
that is hazardous, and the
Sustainability-related risks ing, sourcing, product use, and end-of-life risk premiums.
percentage that is recycled.
and opportunities stages influence value. Many chemicals Other impacts:
Intensifying regulatory and public used in manufacturing are hazardous • Operating costs associated
concern about global resource con- to human health and the environment, with water use and/or
waste management
straints, climate change, and pollution exposing companies to reputational and • Value of water rights,
create challenges due to the environ- regulatory risks. Dependence on large affecting intangible assets
mental and social impacts of the product volumes of natural capital inputs intro- • Capital expenditures
lifecycle, particularly as semiconductors duces vulnerabilities to price increases to meet regulatory
are being widely used across industries. and supply disruptions. Human resources
and patent generation are key value driv- • Regulatory penalties,
State of disclosure ers. The industry is well positioned to use remediation liabilities, and
Most companies analyzed disclose its innovation potential to reduce envi- compliance costs
information on several topics in the ronmental and social impacts, lowering
Provisional Standard; however, such regulatory and demand risks.
274 275

Recruiting and The percentage of employees Ability to leverage R&D ll l Supply chain The percentage of products, Sourcing and efficient use lll l
managing a that are foreign nationals and create competitive management by revenue, that contain of key materials, affecting
global skilled and located offshore. products, impacting and materials critical materials. input costs or availability.
workforce revenue-generation ability sourcing
The percentage of tungsten, Other impacts:
and market share.
tin, tantalum, and gold • Production disruptions,
Other impacts: smelters within the supply leading to lost revenue
• Reputation and ability chain that are verified • Regulatory compliance
to attract employees as conflict-free. costs associated with
• Operating costs related conflict minerals
Discussion of the
to recruiting, developing, • Reputational
management of risks
and retaining employees impacts, affecting
• Operating risks from
associated with use of
long-term growth
critical materials and
recruiting foreign • R&D expenses for
conflict minerals.
workers and offshoring alternative inputs
critical functions • Higher risk premiums for
those companies relying
Employee Discussion of efforts to Violations of employee lll heavily on critical materials
health assess, monitor, and reduce health and safety laws, but lacking the ability to
and safety exposure of employees affecting liabilities and source them effectively
to human health hazards. exposure to lawsuits.
Intellectual The number of patent Adverse legal or regulatory ll ll
property litigation cases, the number rulings related to anti-trust
and regulatory fines and • Regulatory penalties and
protection and of successful cases, and the and IP, affecting market
settlements associated corrective actions costs
competitive number where the company share and pricing power.
with employee health and • Reputational impacts,
behavior is patent holder.
safety violations. affecting ability to Other impacts:
expand operations The amount of legal • Liabilitiesand one-time
and regulatory fines and expenses from anti-trust
Business model and innovation settlements associated with or IP rulings
anti-competitive practices. • Vulnerability to legal
Product lifecycle The percentage of products Evolving energy efficiency ll l challenge due to strong
management by revenue that contain and chemical use reliance on IP and market
IEC 62474 declarable regulations and standards, dominance, affecting
substances. influencing ability to attract risk profile
new customers and gain
Processor energy efficiency
market share.
at a system-level for servers,
desktops, and laptops. Other impacts:
• R&D and capital
expenditures to reduce or
eliminate toxic materials
in products and improve
energy efficiency
• Use of alternative
materials, impacting cost
of raw materials
compliance costs
276 277
SOFTWARE & IT SERVICES
Environment
Employment 2.5M 2 Human capital Environmental Total energy consumption, Operating costs associated ll l
footprint of the percentage that with energy and water use in
Business model hardware is grid electricity, and data centers.
Revenue US$542.4B 4 and innovation infrastructure the percentage that
is renewable. • Virtualization, reducing
The total water withdrawn, energy intensity and
0 5 10 15
5-year ROA 6.7% 10 percentage recycled, number of servers,
and percentage in thus lowering capital
Industry market beta 1.15 29 water-stressed regions. expenditures and
rent payments
State of disclosure Top companies (in Russell 3000)** Descriptions of the • Capital expenditures for
integration of environmental
% disclosure 87% 30 Microsoft Corp. energy- or water-related
considerations to
projects
International Business Machines Corp. strategic planning for data • Potential energy or water
% boilerplate 68% 77 center needs.
Hewlett Packard Enterprise Co. (cooling) supply disruptions,
*Out of 79 industries Oracle Corp. affecting risk profile
Accenture PLC • Value proposition for
customers looking
at “greening” their
supply chain, affecting
market share
The industry includes companies Most companies analyzed disclose Social capital
involved in the development and sales information on several of the topics
of applications and infrastructure soft- included in the Provisional Standard; Data privacy Discussion of policies Reputational impacts lllll
and freedom and practices relating to and limits on new product
ware and middleware. The industry however, much of this disclosure uses
of expression collection, usage, and development that
also includes IT Services companies boilerplate language (68%). This is retention of customers’ uses customer data,
delivering specialized IT functions, such particularly true for narrative on “Data information and personally affecting revenues and
as consulting and outsourced services. Security” and “Data Privacy & Freedom identifiable information. long-term growth.
New industry business models include of Expression.” This figure is the high- The percentage of Other impacts:
cloud computing, software as a service, est for any industry in the sector. The users whose customer • Regulatory compliance
information is collected costs and operational
virtualization, machine-to-machine use of company-tailored narrative and
for secondary purpose, expenses to ensure privacy
communication, big data analysis, and metrics is common for disclosure on and percentage who • Remediation costs,
machine learning. “Intellectual Property Protection & have opted-in. penalties, and liabilities
Competitive Behavior.” The amount of legal
from customer or
regulatory action
Sustainability-related risks and regulatory fines and • Exposure of data privacy
and opportunities Exposure to financial impact settlements associated with
customer privacy.
Software and hardware systems together Emerging regulations and customer risk profile
provide enhanced business efficiencies concerns on data security and privacy The number of government • Potential revenue at risk
or law enforcement for operations in countries
and can enable customers to lower their can affect reputation and revenues. The
requests for customer where privacy and
environmental impacts and expand industry’s ability to attract and retain information and the freedom of expression are
social benefits. However, with rapid a diverse talent pool directly influences percentage resulting less protected
growth in software and digitalization of innovation potential and growth. Lastly, in disclosure.
lives and economies, software companies governance issues, such as IP protection The list of countries where
have to manage data center resource use, and business disruptions that may core products or services
are subject to government-
data privacy and security, and intellec- have systemic impacts, have implications
required monitoring,
tual and human capital to succeed. both for innovation and competition; blocking, content filtering,
data center energy and water use also or censoring.
affects costs.
278 279

Data security The number of data Reputational impacts lllll Leadership and governance
security breaches and and ability to combat
percentage involving cyberattacks, affecting Managing The number of Reputational impacts lllll
customers’ personally revenues and long-term systemic performance issues and on brand value and
identifiable information. growth; and software risks from service disruptions and long-term growth.
services to enhance cyber- technology total customer downtime.
Discussion of management Other impacts:
security, affecting revenue. disruptions
approach to identifying Discussion of business • Contractual liability
and addressing data Other impacts: continuity risks related to or claims for damages
security risks. • Cloud-computing assets disruptions of operations. • R&D and capital
at risk expenditures for
• R&D and capital technology and
expenditures for system upgrades
technology and • Systemic impacts, possibly
system upgrades affecting risk profile
costs and operational Intellectual The number of patent Adverse legal or regulatory ll ll
expenses to ensure property litigation cases, number of rulings related to anti-trust
data security protection and successful cases, and the and IP, affecting market
• Remediation costs, competitive number where the company share and pricing power.
penalties, and liabilities behavior is patent holder.
from customer or Other impacts:
regulatory action The amount of legal • Liabilitiesand one-time
• High-profile data security and regulatory fines and expenses from anti-trust
breaches, affecting settlements associated with or IP rulings
anti-competitive practices. • Vulnerability to legal
risk profile
challenge due to strong
Human capital reliance on IP and market
dominance, affecting
risk profile
Recruiting The percentage of Stronger innovation and lll l • Potential changes to
and managing employees that are superior ability to cater to
regime of IP protection
a global, foreign nationals and a diverse customer base,
for software, affecting
diverse skilled located offshore. with impact on both market
risk profile
workforce share and pricing power.
Employee engagement as
a percentage. Other impacts:
The percentage of
gender and racial/ethnic • Operating costs related
group representation for
executives and all others.
• Operating risks from
recruiting foreign
workers and offshoring
critical functions
280 281
SOLAR ENERGY

Environment
# of companies 7 63
Social capital
Business model
Leadership
Net income US$127.4M 70 and governance
0 5 10 15
5-year ROA 0.0% 78

% disclosure 73% 62 First Solar Inc.
SunPower Corp.
Advanced Energy Industries Inc.
*Out of 79 industries SolarCity Corp.
Sunrun Inc.

Solar energy companies manufacture In line with sector-wide practices,
solar energy equipment, which includes when disclosure on the topics included
solar photovoltaic modules, polysilicon in the Provisional Standard is available,
feedstock, solar thermal electricity gen- it is typically provided using boilerplate
eration equipment, solar inverters, and language (51%). This type of language
other related components. Companies is common to describe risks and oppor-
may also develop, build, and manage tunities from environmental and social
solar energy projects and offer financing topics. While lack of disclosure on
or maintenance services to customers. “Materials Sourcing” is prevalent, the
use of company-tailored narrative and
Sustainability-related risks metrics is common for the “Management
and opportunities of Energy Infrastructure Integration &
Although solar energy is increasingly Related Regulations” topic.
cost competitive, the industry will need
to continue its rapid pace of innovation, Exposure to financial impact
while minimizing environmental and The industry receives significant
social concerns (e.g., manufacturing efflu- government support, generally with the
ents, the impacts of sourcing materials, understanding that it will lower GHG
such as neodymium), in order to keep its emissions and damage to health and
license to operate. the environment. If solar companies
do not adequately manage the waste
generated during manufacturing or
sourcing of inputs, they could face dif-
ficulties with obtaining permits and
winning new consumers. Continued
innovation is necessary to reduce costs
and scale successfully.
283

Environment Hazardous The amount of waste Operational efficiency and lll l

materials from operations, the cost structure impacts from
Energy Total energy consumption, Operating costs ll management percentage that is recycled, using and disposing of
management in the percentage that associated with energy and the percentage that is hazardous materials.
manufacturing is grid electricity, and use in manufacturing. hazardous.
Other impacts:
the percentage that The number and aggregate • Reputational impacts,
Other impacts:
is renewable. • Joint benefit of cost quantity of reportable spills affecting long-term growth
reduction and enhanced and quantity recovered. • Production disruptions
reputation, expanding or asset impairments due
market share to community action
• Capital expenditures for • Perceived operational risk,
energy-related projects affecting cost of capital
• Potential energy supply • Regulatory penalties,
disruptions, affecting remediation liabilities,
risk profile and compliance costs
Water The total water withdrawn Production disruptions ll l for handling
management in and total water consumed, that result from water hazardous materials
manufacturing and the percentage of each constraints
in water-stressed regions. in water-stressed areas Community Project development asset Loss of permits and lll l
and/or inadequate and ecological impairments associated regulatory and community
Discussion of water impacts with community or push-back, leading to asset
management risks and of project ecological impacts. impairments and loss in
description of strategies development market share.
risk premiums. Description of efforts
those risks. Other impacts: to address community Other impacts:
• Operating costs associated and ecological impacts • Project delay, causing
with water use and/or in solar energy system unexpected increases in
wastewater treatment project development. operating expenses
• Value of water rights, • Uncertainty about
affecting intangible assets approval of land-use or
• Capital expenditures environmental permits,
to meet regulatory raising project risk profile
requirements and install • Reputational impacts,
more efficient systems affecting market share
• Regulatory penalties and and long-term growth
compliance costs
Management The average price of solar Lower grid integration lll l

of energy energy photovoltaic (PV) barriers and soft costs,
infrastructure modules and completed leading to cost savings and
integration utility-scale systems. allowing for expansion of
and related market share.
Description of risks
regulations
associated with integration Other impacts:
of solar energy into existing • Lower curtailment costs
energy infrastructure, and • Capital expenditures
discussion of efforts to related to new or
manage those risks. improved systems
• R&D expenses
Discussion of risks and • Regulatory uncertainty,
opportunities associated
with energy policy and its
impact on the integration
of solar energy into existing
energy infrastructure.
284 285
TELECOMMUNICATIONS
Environment
Product lifecycle The percentage of products End-of-life costs that lll l Market cap US$552.0B 16 Social capital
environmental sold that are recyclable affect project economics,
impacts or reusable. potentially lowering sales Human capital
volumes and impacting Employment 689.1K 15
retained value calculation. Business model
material recovered, and the Revenue US$412.9B 9 and innovation
percentage of recovered Other impacts:
Leadership
materials that are recycled. • Higher risk premium in Net income US$31.4B 9 and governance
the face of potentially
Discussions of approach 0 5 10 15
costly legislation for 5-year ROA 2.2% 60
to manage use, Industry exposure Market average exposure
companies not adequately
reclamation, and disposal Industry market beta 0.74 64
addressing end-of-life
of hazardous materials.
management
• Recovery and recycling of State of disclosure Top companies (in Russell 3000)**
input materials, possibly % disclosure 63% 68 AT&T Inc.
resulting in cost savings
• R&D expenses for Verizon Communications Inc.
improved recyclability, Sprint Corp.
recycling, or reuse *Out of 79 industries T-Mobile US Inc.
of products CenturyLink Inc.
affecting long-term growth **As of the date of this publication

Materials The percentage of tungsten, Sourcing and efficient use lll l The wireless segment of the industry Compared to other industries in the
sourcing tin, tantalum, and gold of key materials, affecting provides direct communication through sector, companies provide lower levels
smelters within the supply input costs or availability. radio-based cellular networks, and of disclosure. Lack of disclosure on
chain that are verified
conflict-free.
Other impacts: operates and maintains switching and topics, such as “Product End-of-Life
• Production disruptions, transmission facilities. The wireline seg- Management” and “Environmental
Discussion of the leading to lost revenue
management of risks • Regulatory compliance ment provides voice communication via Footprint of Operations” drives this
associated with the use of costs associated with the Public Switched Telephone Network, result. When available, disclosure
conflict minerals. conflict minerals or voice over internet protocol (VOIP) is typically provided using boilerplate
• R&D expenses
Discussion of the phone, TV, and broadband internet ser- language (43%); this is particularly true
management of
affecting sales and vices over fiber optic cables. for social topics, such as “Data Privacy”
environmental risks and “Data Security.”
long-term growth
associated with the
polysilicon supply chain.
• Heavy reliance on critical Sustainability-related risks
materials but a lack of and opportunities Exposure to financial impact
ability to source them
effectively, resulting in Telecom services have helped the public The sustainability challenges associated
higher risk premiums and private sector improve efficiencies with expanding telecom infrastructure
through increased speed and variety and data transmission over telecom
of communication media. Expansion in networks can affect company financial
network spectrum and data transmission value. Value is impacted by emerging
are leading to the build-out of physical regulations and public expectations
infrastructure, including data centers. around data use and security; changing
The industry faces several sustainability energy expenditures due to increasing
challenges and opportunities relating energy consumption and prices; reg-
both to the physical infrastructure ulations that mitigate environmental
(e.g., energy consumption of data cen- impacts at the end of the useful lives
ters), as well as transmission of user data of telecom and other devices; and reg-
(e.g., data privacy and security). ulatory and public pressure to stave off
anti-competitive activities.
286 287

Environment Data security The number of data Reputational impacts, lllll

security breaches and affecting revenues and
Environmental Total energy consumption, Operating costs associated ll l percentage involving long-term growth.
footprint of the percentage that with energy use in operations. customers’ personally
Other impacts:
operations is grid electricity, and identifiable information. • Regulatory compliance costs
Other impacts:
the percentage that • Virtualization reduces Discussion of management and operational expenses to
is renewable; the amount approach to identifying ensure data security
energy intensity and
of energy consumption by and addressing data • R&D and capital
number of servers, lowering
cellular and fixed networks. security risks. expenditures for technology
rent payments and system upgrades
• Capital expenditures for • Remediation costs, penalties,
energy-related projects and liabilities from customer
• Potential energy supply or regulatory action
disruptions, affecting • High-profile data security
risk profile breaches, affecting risk profile
Data privacy Discussion of policies Reputational impacts lllll Product Materials recovered through Reputational impacts lll
and practices relating to and limits on new end-of-life take back programs; related to both
collection, usage, and product development management percentage of recovered end-users and hardware
retention of customer that uses customer data, materials that are reused, manufacturers, affecting
information and personally affecting revenues and recycled, and landfilled. long-term growth.
identifiable information. long-term growth. Other impacts:
The percentage of users Other impacts: • Increasing operating
whose customer information • Regulatory compliance expenses from
is collected for secondary costs and operational end-of-life management
purpose, and percentage expenses to ensure privacy standards from
who have opted-in. • Remediation costs, hardware manufacturers
penalties, and liabilities or regulators
The amount of legal • Potential net cost savings
from customer or
and regulatory fines and from refurbishing and
regulatory action
settlements associated with • Exposure of data privacy re-using collected devices
customer privacy.
The number of government risk profile Leadership and governance
or law enforcement requests
for customer information, Managing The average interruption System disruptions, lllll
and the percentage that systemic frequency and average affecting reputation,
results in disclosure. risks from interruption duration. brand value and long-term
technology growth.
Descriptions of systems to
disruptions
provide unimpeded service Other impacts:
during service interruptions. • Contractual liability
or claims for damages
• R&D and capital
expenditures for
technology and
system upgrades
• Systemic impacts, possibly
288 289
TOBACCO
Environment
# of companies 7 63
Competitive The amount of legal Rulings related to anti-trust ll ll Market cap US$357.9B 27 Social capital
behavior and regulatory fines and and M&A activity, affecting
settlements associated with market share and pricing Human capital
anti-competitive practices. power if the dominant Employment 126.2K 57
position in key markets Business model
is challenged. Revenue US$61.9B 49 and innovation
Leadership
• Adverse legal or
regulatory anti-trust 0 5 10 15
5-year ROA 12.3% 1
rulings, creating liabilities Industry exposure Market average exposure
or one-time expenses Industry market beta 0.64 73

• Vulnerability to legal
challenges, influencing State of disclosure Top companies (in Russell 3000)**
risk profile % disclosure 100% 1 Philip Morris International Inc.
Altria Group Inc.
% boilerplate 0% 1
Reynolds American Inc.
*Out of 79 industries Universal Corp./VA
Alliance One International Inc.
Industry description reality as an opportunity to develop less

Tobacco companies manufacture harmful products.
tobacco products, including cigarettes,
cigars, and smokeless alternatives; State of disclosure
as well as farm tobacco. Large tobacco All companies analyzed disclose
companies operate globally and information on the two topics included
own exclusive rights to sell certain in the Provisional Standard. Moreover,
brands of cigarettes in diverse markets. in about three-quarters of cases, such
Most tobacco is grown by indepen- disclosure is provided using tailored
dent farmers, who typically sell their narrative. The use of metrics is com-
crops to merchants or manufacturers mon (25%), in particular for the “Public
under contract. Health” topic. This is the highest fig-
ure for any industry in the sector. The
Sustainability-related risks industry is a top performer across the
and opportunities 79 industries included in the analysis.
This global industry produces a
recreational substance that is the focus Exposure to financial impact
of public health campaigns, as it has As regulations lead to generally lower
been linked to various diseases and smoking rates worldwide, they put pres-
higher societal health care costs. While sure on the industry’s revenue growth.
specific regulations vary widely by coun- Public health concerns are increasing
try, the industry has faced rising excise advertising restrictions, which could
taxes from governments looking to curb potentially decrease industry revenue.
tobacco use among citizens. Marketing On the other hand, there is a growing
practices, especially those directed market for products with lower health
to younger generations, have also risks that deliver nicotine to consumers
been the focus of regulation. However, than traditional cigarettes.
some companies are looking at this
290 291
TOYS & SPORTING GOODS
Environment
# of companies 9 56
Public health Revenue from smokeless Increasing consumer lllll Employment 47.0K 65 Human capital
tobacco products, non- awareness of health
tobacco nicotine-delivery impacts (as well as Business model
products, and other regulations that restrict Revenue US$15.3B 67 and innovation
“tobacco harm-reduction” product development, Leadership
products. marketing, or locations Net income US$1.0B 63 and governance
for tobacco use), 0 5 10 15
Description of the process 5-year ROA 6.1% 17
affecting revenues and Industry exposure Market average exposure
to assess risks and
long-term growth. Industry market beta 0.77 61
opportunities associated
with “tobacco Other impacts:
harm-reduction” products. • Regulatory State of disclosure Top companies (in Russell 3000)**
compliance costs % disclosure 88% 27 Mattel Inc.
• R&D expenditures for
Hasbro Inc.
new reduced-harm Vista Outdoor Inc.
product lines *Out of 79 industries Callaway Golf Co.
• Reduced-harm products JAKKS Pacific Inc.
creating new market
opportunities and
improved pricing power
• Evolving regulatory
environment and negative Industry description State of disclosure
industry image, possibly The Toys & Sporting Goods industry Only two disclosure topics are part
affecting cost of capital comprises two distinct segments: of the Industry’s Provisional Standard.
companies that manufacture toys and All companies analyzed provide disclo-
games, and companies that manufacture sure relevant to the “Chemical & Safety
Marketing The amount of legal Violations of regulations llll sporting and athletic goods, such as Hazards of Products” topic; however, this
practices and regulatory fines, related to marketing and bicycles, golf clubs, fitness equipment, disclosure is mostly boilerplate. On the
settlements, and labeling practices, affecting and other similar products. The level of other hand, disclosure practices on the
enforcement actions liabilities.
associated with marketing,
manufacturing integration varies among “Labor Conditions in the Supply Chain”
Other impacts: and within segments; manufacturing topic are characterized by an even use
labeling, and advertising. • Regulations that limit
Description of the advertising or marketing
is generally outsourced and based pri- of tailored and boilerplate language.
alignment of tobacco possibilities could shrink marily in Asia. However, a handful of companies ana-
advertising, promotion, and the accessible market lyzed do not provide relevant disclosure
sponsorship (TAPS) activities for tobacco products, Sustainability-related risks on this front.
with Article 13 of the affecting revenues and
World Health Organization long-term growth
and opportunities
Framework Convention • Reputational impacts, The importance of sustainability Exposure to financial impact
on Tobacco Control affecting brand value performance is driven by concerns about The industry faces increased scrutiny
(WHO FCTC). chemical use and product safety, particu- relating to the safety of its products,
Description of alignment larly since many toys and sporting goods including the use of harmful chemicals,
of tobacco labeling and cater to children. With the majority of which can affect companies’ ability to
packaging practices
with Article 11 of the
manufacturing taking place in countries continue producing and selling prod-
WHO FCTC. with low labor standards, companies in ucts for children. The industry is also
this industry need to manage potential susceptible to labor violations and
labor issues in the supply chain, includ- high-profile examples of sub-standard
ing forced and child labor, low wages, working conditions in manufactur-
poor health and safety conditions, and ing, which can damage a company’s
long working hours. reputation, decrease sales, and lead to
supply disruptions.
292 293
WASTE MANAGEMENT
Environment
Chemical and The number of recalls and Product recalls, creating lllll Employment 133.3K 55 Human capital
safety hazards total units recalled. one-time costs; and
of products repeated recalls, influencing Business model
The number of Letters Revenue US$33.2B 61 and innovation
risk profile.
of Advice received. Leadership
The amount of legal • Liabilities from legal
and regulatory fines and 0 5 10 15
or regulatory action 5-year ROA 3.2% 47
settlements associated with • Impacts on cost structure Industry exposure Market average exposure
product safety. Industry market beta 0.64 74
due to safety and
The description of processes chemicals regulations and
to assess and manage risks compliance costs State of disclosure Top companies (in Russell 3000)**
and/or hazards associated • Reputational impacts, % disclosure 85% 34 Waste Management Inc.
with chemicals in products. affecting demand and
Republic Services Inc.
long-term growth % boilerplate 29% 16
• R&D expenditures for Clean Harbors Inc.
product modifications to *Out of 79 industries Stericycle Inc.
improve safety and reduce Tetra Tech Inc.
chemicals use

Labor The number of facilities Reputational impacts, lll l The industry includes companies that Disclosure by the companies analyzed
conditions in audited to a social affecting brand
the supply responsibility code value, revenues, and collect, store, dispose of, recycle, or treat is characterized by a relatively high use
chain of conduct. long-term growth. various forms of waste (including haz of metrics (36%). This figure is the high-
The direct suppliers’ Other impacts: ardous and municipal solid waste, and est for any industry in the sector and is
social responsibility audit • Production and supply compostable and recyclable materials), mainly driven by quantitative reporting
compliance, including disruptions, leading to
from residential, commercial, and indus- on topics, such as “Labor Relations” and
priority non-conformance lost revenue
rate and associated • Cost structure impacts trial clients. Certain industry players also “Recycling & Resource Recovery.” Use of
corrective action rate, and from labor standards and provide environmental engineering and boilerplate (29%) is also common, par-
other non-conformances wages in the supply chain consulting services. ticularly for reporting on air quality and
rate and associated • Higher risk premiums
worker health and safety risks.
corrective action rate. from poor labor standards
Waste Management companies continue The industry provides an essential public
to look toward managing waste to protect service as it is uniquely positioned to man-
public health and the environment, while age the environmental impacts of waste.
also enabling recycling and resource To play this role effectively, the industry
recovery, mitigating GHG and other air must manage the impacts of its own oper-
emissions, and managing the ecological ations –which affect operating and capital
impacts of landfills. Other key challenges expenditures – and constantly innovate
include improving fuel efficiency and ways to collect, treat, recycle and/or
managing labor relations and worker dispose new types of waste. Public and
health and safety. The industry is well regulatory interest in addressing closed-
positioned to contribute to a circular looped economy principles and diversion
economy through landfill diversion and of waste from landfills presents challenges
recovery of materials. to revenues and industry growth for cer-
tain business models; however, it can also
present new revenue opportunities.
294 295

Environment Management Total Toxic Release Inventory Operational efficiency lllll

of leachate (TRI) releases, and the and cost structure impacts
Greenhouse The gross global Scope 1 Efforts to reduce and report ll and hazardous percentage released from management of
gas emissions emissions, percentage emissions, as well as the waste to water. leachate and other types
covered under emissions- direct price on carbon, of hazardous waste.
The number of corrective
limiting regulation, and affecting operating and actions implemented for Other impacts:
percentage covered capital expenditures. landfill releases. • Capital expenditures
under emissions-reporting to strengthen leachate
Other impacts: The number of incidents of
regulation. • Revenue opportunity from and hazardous
non-compliance associated
The total landfill gas sales of landfill gas or waste management
with environmental impacts.
generated, percentage renewable energy credits infrastructure
that is flared, and the from energy projects • Regulatory penalties,
percentage that is used • Regulatory penalties remediation and
for energy. • Potential impact on compliance costs
permits for setting up • Liabilities from legal
Descriptions of long- and or regulatory actions
or expanding facilities
short-term strategy or • Frequent fines or
plan to manage Scope 1 unexpected abatement
emissions, emission- costs, affecting risk profile
reduction targets, and an • Reputational impacts,
analysis of performance affecting intangible assets
against those targets.
Human capital
Air quality Air emissions of the Operational efficiencies, llll
following pollutants: NOX leading to a lower cost
(excluding N2O), SOX, structure over time.
Workforce The total recordable injury Operational efficiencies and l l
health and rate, fatality rate, and productivity improvements
non-methane volatile
Other impacts: safety near miss frequency rate from strong worker health
organic compounds • Regulatory penalties and for direct employees and and safety performance.
(NMVOCs), and hazardous
compliance costs contract employees.
air pollutants (HAPs). • Capital expenditures
Other impacts:
The Safety Measurement • Regulatory penalties and
The number of facilities to install best-in-class
System BASIC percentiles corrective action costs
in or near areas of dense control technology
for: Unsafe Driving, • Liabilities from personal
population. The number • Liabilities due to legal
Hours-of-Service injury litigation
of incidents of non- challenges from the local
Compliance, Driver • Reputational impacts,
compliance associated population, businesses,
Fitness, Controlled affecting ability to
with air emissions. or regulators
• In extreme cases, closure
Substances/Alcohol, attract employees
Vehicle Maintenance,
of facilities, restrictions
and Hazardous
on the amount of
waste processed, or
nonrenewal of permits – The number of vehicle
all affecting the ability to accidents and incidents.
generate revenue
Labor relations The percentage of Production disruptions from ll
Fleet fuel Fleet fuel consumption Operating costs from ll l active workforce labor disputes, affecting
management and the percentage that is fuel consumption. covered under collective revenues and market share.
renewable. bargaining agreements.
The percentage of • Capital expenditures The number and duration • Poorlabor
alternative energy vehicles to retrofit and/or of strikes and lockouts. relations, creating
in fleet. replace waste collection unanticipated wage and
fleets with more fuel compensation increases
efficient alternatives
• Exposure to volatility
in fuel prices, affecting
risk profile
296 297
WATER UTILITIES
Environment
Recycling The amount of waste Expanded revenues from ll Employment 11.6K 74 Human capital
and resource incinerated, the percentage materials recovery and
recovery of waste that is hazardous, recycling of certain types Business model
and the percentage of of wastes, mitigating the Revenue US$5.7B 76 and innovation
waste that is used for impact of slower growth of Leadership
energy recovery. landfill revenue. Net income US$904.6M 64 and governance
0 5 10 15
The percentage of Other impacts: 5-year ROA 2.8% 54
customers receiving • Reduced operating and
recycling and composting capital expenditures from Industry market beta 0.40 78
services, by customer type. diversion of certain types
of waste from landfills State of disclosure Top companies (in Russell 3000)**
The amount of material • R&D and capital
recycled and composted. % disclosure 84% 35 American Water Works Co. Inc.
expenditures for
Aqua America Inc.
The amount of electronic materials recovery % boilerplate 53% 56
waste collected and the • Innovative business California Water Service Group
percentage recovered models addressing *Out of 79 industries American States Water Co.
through recycling. regulatory changes, SJW Corp.
reducing risk profile

Companies in the industry own and Over four-fifths of disclosure examples
operate water supply and wastewater analyzed for this industry indicate that
treatment systems (generally struc- companies recognize the materiality of
tured as regulated utility businesses) or the topics included in the Provisional
provide operational or other services to Standard. In line with sector-wide
system owners (usually market-based practices, use of boilerplate is common
operations). Water supply systems (53%), in particular for environmen-
source, treat, and distribute water to tal topics, such as water scarcity and
customers. Wastewater systems collect drinking water and effluent quality
and treat sewage, graywater, and indus- management. Tailored reporting is
trial waste fluids. common for the “Distribution Network
Efficiency” topic.
Providing safe, reliable drinking water, Efficiently using water and energy
and treating wastewater effectively to resources is key to controlling costs,
avoid releasing potentially harmful efflu- especially in the context of increased
ents back into the environment, creates prices and supply volatility in water-
a strong link to social and environmental scarce regions. Drinking water and
capitals. Along with ensuring affordable wastewater standards impact operating
rates, this industry must consider the and capital expenditures, and expose
long-term viability of water supplies companies to significant fines and
and the potential physical impacts to its liabilities. It is also critical that business
networks from a changing climate, while models adapt to the need for water effi-
also accounting for evolving customer ciency, and to decoupling mechanisms,
consumption habits. Water-use efficiency while maintaining social capital through
cascades across all aspects of operations. fair and affordable rates.
298 299

Energy The total energy Operating costs l l Drinking water The number of acute Violations of drinking water lllll
management consumption, the associated with energy quality health-based, non-acute quality regulations, leading
percentage that is grid use in operations. health-based, and to increased liabilities and
electricity, and percentage non-health-based drinking remediation costs.
Other impacts:
that is renewable. water violations.
• Capital expenditures Other impacts:
focused on improved Discussion of strategies • Regulatory penalties and
energy efficiency of to manage drinking compliance costs
water networks water contaminants • Potential for asset or
of emerging concern. business seizure as a result
Effluent quality The number of incidents of Violations of effluent l l of water quality failures in
management non-compliance with water quality regulations, leading extreme situations
effluent quality permits, to legal and regulatory • Operating and capital
standards, and regulations. penalties. expenditures to improve
the sourcing or treatment
Discussion of strategies Other impacts: process of raw water and
to manage effluents of • Regulatory compliance maintain water quality
emerging concern. costs • Reputational impacts,
• Operating and capital
expenditures to and long-term growth
prevent untreated
effluent discharges
Fair pricing The number of formal Inability to earn the allowed lll l
and access customer complaints rate of return, or the risk
Water scarcity The total fresh Inadequate supplies of ll l regarding pricing of of not earning this return,
water sourced from water lead to decreased and/or access to water raising the cost of capital.
water-stressed regions volumes of water sold, received and the
and the percentage affecting revenues. Other impacts:
percentage • Reputational
purchased from a impacts,
Other impacts: that is withdrawn.
third party. affecting intangible assets
• Water purchasing costs Discussion of how • Risks of potential
The volume of recycled increase during times considerations of fair pricing municipalization in
water delivered. of drought, affecting and access are integrated extreme cases, leading to
operating costs into determinations of asset seizure, increased
Discussion of management
and profitability rate structures. legal costs, and/or
of risks associated with the • Operations concentrated
quality and availability of decreased revenue
in water-scarce regions,
water resources.
impacting risk profile and
cost of capital
• The security of reliable
sources of water, End-use The customer water savings Ability to promote alternative ll l
possibly incurring efficiency from efficiency measures rate designs and implement
capital expenditures by market. end-use efficiency programs,
affecting stability of
long-term revenues, revenue
growth opportunities, and/or
risk premiums.
Other impacts:
water end-use efficiency
investments
• Operating expenses
to implement customer
efficiency programs
• Lower energy and
water treatment and
transportation costs
300 301
WIND ENERGY
Environment
# of companies 1 79
Distribution The water pipe Levels of non-revenue ll Market cap US$490.9M 79 Social capital
network replacement rate. water, affecting operating
efficiency costs and impacting Human capital
The volume of non-revenue Employment 1.8K 79
revenues.
real water losses.
Business model
Other impacts: Revenue US$585.9M 79 and innovation
Leadership
to replace or repair Net income US$7.7M 72 and governance
infrastructure and
operating expenses for 0 5 10 15
5-year ROA 0.2% 77
maintenance in order Industry exposure Market average exposure
to improve efficiency Industry market beta — —
Leadership and governance State of disclosure Top companies (in Russell 3000)**
% disclosure 63% 69 TPI Composites Inc.
Network The water treatment System disruptions, lll l
resiliency and capacity located in FEMA affecting revenue and risk % boilerplate 50% 48 **As of the date of this publication
impacts of Special Flood Hazard Areas profile.
climate change or foreign equivalent. *Out of 79 industries
Other impacts:
The volume of sanitary • Reputational impacts,
sewer overflows (SSO) affecting market share
and the percentage that and long-term growth
is recovered. • Asset write-downs due
The number of
to damaged plant, Industry description State of disclosure
property, and equipment The Wind Energy industry comprises Given its small size, the disclosure
service disruptions, • Operating costs for
population affected,
systems maintenance companies that manufacture wind analysis for this industry only focused
and average duration. • Capital expenditures turbines, blades, towers, and other on two companies. When available,
Discussion of efforts to for infrastructure components needed for wind power disclosure on the topics included in the
identify and manage upgrades or to repair generation. The industry also includes Provisional Standard is provided using
risks and opportunities damaged infrastructure
related to the impact of companies that develop, build, and man- boilerplate language, in particular, for
climate change on the age wind energy projects. Manufacturers the “Workforce Health & Safety” topic.
distribution network. also offer post-sale maintenance and Neither of the two companies analyzed
support services. Turbines can be provided relevant disclosure on the
installed onshore or offshore, with chal- “Materials Sourcing” topic.
lenges in project development for each
type of installation. Exposure to financial impact
With several renewable energy technol-
Sustainability-related risks ogies available, the most cost-effective
and opportunities and socially beneficial means of reducing
This industry has experienced years of GHGs are likely to gain competitive
significant government support. While advantages. In this context, efficiency
wind energy is becoming increasingly in the use and sourcing of materials,
cost competitive, the industry will need and incorporation of environmental
to continue its pace of innovation while and social attributes in product design
minimizing environmental and social and project development, will help
concerns (e.g., community and ecological wind energy companies reduce impacts
impacts of project development, use on the environment, lower costs, and
of bulk materials, etc.) in order to keep drive growth.
its societal license to operate and finan-
cial incentives.
302 303

Workforce The total recordable injury Strong workforce health llll Materials The percentage of materials Sourcing and efficient lll l
health and rate and fatality rate for and safety culture, sourcing costs for items containing use of key materials,
safety direct employees and impacting reputation and critical materials. affecting input costs
contract employees. ability to gain and maintain or availability.
The percentage of tungsten,
contracts and market share.
tin, tantalum, and gold Other impacts:
Other impacts: smelters within the supply • Production disruptions,
• Regulatory penalties and chain that are verified leading to lost revenue
corrective action costs conflict-free. • Regulatory compliance
• Liabilities from personal costs associated with
Discussion of the
injury litigation conflict minerals
• Operational efficiency and
management of risks • R&D expenses
associated with the use • Reputational impacts,
employee productivity
affecting sales and
conflict minerals.
Business model and innovation long-term growth
Design to The average A-weighted Loss of permits and lll l materials and a lack of
mitigate sound power level of regulatory and community ability to source them
community wind turbines by wind push-back, leading to asset effectively, possibly resulting
and ecological turbine class. impairments and loss in in higher risk premiums
impacts market share.
Backlog cancellations
associated with community Other impacts:
or ecological impacts. • Violations of
environmental and
Description of efforts to
endangered species
address ecological and
regulations, leading to
community impacts of wind
fines and penalties
energy production through • R&D expenses
turbine design. • Lower risk profile
for projects
• Reputational
impacts, affecting
long-term growth
Materials Top five materials consumed Efficiency in use of ll l

efficiency by weight. materials, affecting
operating expenses.
The average top head mass
per turbine capacity by wind Other impacts:
turbine class. • R&D expenses on
product design
Discussion of approach to • Risk profile impacts
optimize materials efficiency
from input supply and
of wind turbine design.
price volatility
• Market share increase if
cost savings are passed
to customers
304 305
INDUSTRY PROFILE FEATURES
dimension (Environment, Social Capital, Human H Exposure to financial impacts section pro-
AEROSPACE & DEFENSE Capital, Business Model & Innovation, Leadership vides a high-level overview of the drivers through
J & Governance) and compares it to the market which the industry’s sustainability risks and
K
average. Since each metric represents a data opportunities can affect revenues, costs, assets,
Value Rank*
(number of metrics) Disclosure
topic What’s measured? Value drivers
Financial
impact
I point on likely material factors affecting the liabilities, and/or cost of capital.
Environment
industry, this is a simple proxy to how exposed a
C Energy
management
Total energy consumed,
the percentage that
Operating costs associated
with energy use
ll l
A
Revenue
Financial impact comprises revenue, expenses
US$354.7B 13
particular industry is to each dimension relative I
and innovation the percentage that
0 5 10 15
5-year ROA 5.7% 20

Hazardous
waste
The amount of hazardous
waste and the percentage
Operational efficiency and
cost structure impacts from
ll ll to the market. (representing the main line items in the income
management of waste that is recycled. using hazardous materials
statement), assets and liabilities (representing the
B
D
D The top five companies are based on the two sides of the balance sheet), and cost
for handling

hazardous materials Russell 3000 Index, which measures the per- of capital (representing the risk premium associ-
segments: (1) commercial aircraft and
parts manufacturing; (2) aerospace
information on the topics in the
Provisional Standard. However, the
Data security The number of data security
breaches and the percentage
Reputational impacts
and ability to combat
lll l formance of the 3,000 largest publicly held ated with a company’s activities, influencing the
E
(3) defense contractors that manufacture
military aircraft, space vehicles, missile
systems, naval ships, and other com-
G
the highest for any industry in the sec-
tor. This language is extensively used
to describe risks around topics, such as
confidential information.
managing data security risks
revenues and
long-term growth
Other impacts:
companies incorporated in the U.S. based on discount rate used in valuation). These aspects
firearms. Airlines and governments are
the main customers of the industry.
“Business Ethics.” In addition, the fuel
economy and supply chain topics have
against cyber threats
• R&D and capital
market capitalization, and represents approxi- represent the key financial value drivers used
technology and
system upgrades
mately 98% of the U.S. public equity market. by analysts and investors in assessing company
change, resource constraints, and safety
and security issues, are intensifying reg-
environmental impacts of manufac-
turing can drive higher costs of waste
expenses to ensure
data security
value and returns that could be affected by the
around the need for improved corporate tion, bribery, and the critical materials
F
sustainability performance. In a time
of changing geopolitical environments,
H
sourcing can also influence costs. Airline
clients generally face low profit margins,
regulatory action
• High-profile data security
breaches, affecting
E The industry description provides an overview sustainability disclosure topics highlighted in
risk profile
pricing pressures, companies need
to innovate and optimize product and
efficiency; both of these factors drive
demand for more fuel-efficient products.
of the industry. The section describes the general SASB standards.
while reducing environmental and
operations, affecting performance.
scope of the industry under the Sustainable
22 23
Industry Classification System, along with other J Likely has a material impact versus likely
characteristics. does not have a material impact: SASB has
identified whether the topic is reasonably likely
A Listed in this table, SASB has delineated the disclosure practices by quality ranking them F The sustainability risks and o
pportunities to have a material impact on key financial drivers
value and rank for several areas that speak either as “No Disclosure”, “Boilerplate”, section presents a high-level review of the indus- (see I). This was based on extensive research on
to an industry’s relative economic position (i.e., “Tailored Narrative” or “Metrics”. The “% try’s under- or over-exposure to certain types evidence of financial impact (see SASB Navigator)
revenue, net income, employment), industry disclosure” shown in each industry profile is the of sustainability risks and opportunities. These and vetted through stakeholder input. A fully
structure and concentration (i.e., number of percentage of all entries analyzed that were not factors can significantly influence the financial filled-in circle indicates that SASB determined
companies), and market profile (i.e., market cap, categorized as “No Disclosure”. Whereas the “% condition or operating performance of companies that a company’s performance on the disclosure
5-year ROA, and industry market beta). boilerplate” shown in each industry profile is the in the industry. topic is likely to have a material impact on that
percentage of entries analyzed that were catego- financial metric; where a circle is not filled in,
B The state of disclosure is based on SASB’s rized as “Boilerplate.” G The state of disclosure section SASB research did not find a likely material
state of disclosure analysis, which examined provides key takeaways from SASB Research impact for that financial metric.
disclosure practices of the top 10 companies, by C Each industry profile includes a chart labeled (see B) regarding how the industry performs on
revenue, in each of the 79 industries in SASB’s Exposure to Sustainability Factors that sustainability disclosure and what disclosure K This is a table that shows all disclosure topics
Sustainable Industry Classification System™ serves as a visual representation of the industry’s trends signify in comparison with other industries included in each industry’s provisional standard,
(SICS™). Overall, 713 annual SEC filings were sustainability profile. The chart is based on the and sectors. the sustainability metrics for each topic, and a
analyzed, the majority of which covered dis- number of metrics included in the industry’s
closure for Fiscal Year 2015. SASB categorized provisional standard for each sustainability
306 307
AEROSPACE & DEFENSE

L M N

Environment
Employment 1.0M 10 Human capital Energy Total energy consumed, Operating costs associated ll l
management the percentage that with energy use
0 5 10 15
5-year ROA 5.7% 20
Hazardous The amount of hazardous Operational efficiency and ll ll
waste waste and the percentage cost structure impacts from
management of waste that is recycled. using hazardous materials
for handling
hazardous materials
segments: (1) commercial aircraft and information on the topics in the
parts manufacturing; (2) aerospace Provisional Standard. However, the
Data security The number of data security Reputational impacts lll l
breaches and the percentage and ability to combat
(3) defense contractors that manufacture the highest for any industry in the sec- confidential information. revenues and
military aircraft, space vehicles, missile tor. This language is extensively used long-term growth
systems, naval ships, and other com- to describe risks around topics, such as managing data security risks Other impacts:
firearms. Airlines and governments are “Business Ethics.” In addition, the fuel against cyber threats
the main customers of the industry. economy and supply chain topics have • R&D and capital
Sustainability-related risks technology and
system upgrades
and opportunities Exposure to financial impact • Regulatory compliance
change, resource constraints, and safety environmental impacts of manufac- expenses to ensure
and security issues, are intensifying reg- turing can drive higher costs of waste data security
around the need for improved corporate tion, bribery, and the critical materials regulatory action
sustainability performance. In a time sourcing can also influence costs. Airline • High-profile data security
of changing geopolitical environments, clients generally face low profit margins, breaches, affecting
risk profile
pricing pressures, companies need efficiency; both of these factors drive
to innovate and optimize product and demand for more fuel-efficient products.
while reducing environmental and operations, affecting performance.
22 23
write-up on specific channels of financial impact access to the “total mix” of information in their
that may potentially arise from the management decision-making process. SASB metrics address
or mismanagement of each disclosure topic. This sustainability impacts, as well as opportunities
information is based on our standards (topics for innovation. Taken together, they characterize
and metrics), and the research on evidence a company’s positioning with respect to
of financial impact that SASB has conducted sustainability issues and the potential for long-
(industry by industry) for the past 4 years, which, term value creation.
together with stakeholder input, indicates how
SASB identified disclosure topics to include in M Value drivers: The value driver is the delivery
the standards. mechanism by which the topic can cause a
financial impact. This information is based on
L What’s measured: This section represents our extensive research over the past four years
SASB performance metrics, which are included (see K).
in all provisional standards issued by SASB SASB STANDARDS
and meet a minimum set of criteria: relevance; N The financial impact indicators show the type ADDRESS THE TOPICS
usefulness; applicability; cost-effectiveness; of financial impact of sustainability topics that LIKELY TO HAVE MATERIAL
comparability; and completeness. These metrics – are reasonably likely to be material for companies IMPACT FOR AN INDUSTRY
both qualitative and quantitative – express a in an industry (see I and J).
80%
fair representation or “account for” company
5 13
performance on material sustainability topics,
On average, they contain just
and ensure that reasonable investors have
Over of
TOPICS and METRICS the metrics in SASB standards
per industry are ALREADY IN USE by companies
and disclosed elsewhere.
308
Accounting for a sustainable future
Sustainability Accounting Standards Board

1045 Sansome Street, Suite 450
San Francisco, CA 94111
(415) 830-9220
sasb.org
Copyright © August 2017 Sustainability Accounting Standards Board

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Sasb Industry Standards: A Field Guide

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SASB INDUSTRY STANDARDS

SASB is committed to bringing

to how sustainability performance 5 SASB governance

that enable measurable, 8 The evolution of reporting

comparable, and decision-useful 9 How we develop our standards

more informed investment choices. 14 Importance of an

THE CURRENT STATE

Established in 2011, the Sustainability The SASB, its standards-setting activities,

This composition is intended to facilitate adherence to “best

PARTICIPANTS IN 2,800+ individuals $23.4T

JEAN ROGERS, PHD, PE KURT KUEHN DAVID POST, CFA

SASB’s creation and mission represent a natural SASB’s standards-development process is

Technology & Communications

Over 85% of investors and issuers (on average) agreed on Consumption II

the likely materiality of SASB’s sustainability disclosure

All % Corporations % Investors/Analysts %

SASB is committed to identifying standards for material EVIDENCE OF FINANCIAL IMPACT

SASB standards are the only sustainability standards

Analyzing the materiality of sustainability information

Traditional industry classification systems present a challenge to

INDUSTRIES impact or consequence, depending on the

FROM A–Z vary from one industry to another, giving each

For more information on the

Likely has material impact

Disclosure Financial Disclosure Financial

Leadership and governance

Business ethics The amount of legal Violations of anti-corruption llll

Disclosure Financial Disclosure Financial

Disclosure Financial Disclosure Financial

Leadership and governance

Environmental The percentage of Environmental and social lll l

Exposure to sustainability factors

Employment 791.7K 13 Human capital

State of disclosure Top companies (in Russell 3000)**

Industry description State of disclosure

Disclosure Financial Disclosure Financial

Environment Leadership and governance

Industry description State of disclosure

Disclosure Financial Disclosure Financial

Environment Business model and innovation

Exposure to sustainability factors

Employment 1.1M 7 Human capital

State of disclosure Top companies (in Russell 3000)**

Industry description included in the Provisional Standard.

Sustainability-related risks Exposure to financial impact

Disclosure Financial Disclosure Financial

Social capital Labor The percentage of Tier 1 Reputational impacts, lll l

Disclosure Financial Disclosure Financial

Leadership and governance

Management The amount of legal Legal and regulatory lllll

Leadership and governance Industry description State of disclosure

Disclosure Financial Disclosure Financial

Environment Business model and innovation

Labor relations The percentage of active Production disruptions from ll l

Disclosure Financial Disclosure Financial

Disclosure Financial Disclosure Financial

Disclosure Financial Disclosure Financial

Environment Leadership and governance

Business model and innovation

Product Discussion of efforts to Regulations, sustainability lll

Data privacy Discussion of policies Reputational impacts llll

technology and Industry market beta 1.96 3

Leadership and governance