Why Do US Companies Fair Poorly in Global ESG Ranking?
New report ranks top US companies in terms of their ESG reporting transparency. The results were…disappointing.
April 20, 2023
Over the last several years, many U.S. companies have prioritized their efforts to identify and address environmental (E), social (S), and governance (G) risks that can be detrimental to their bottom line. But, reporting to stakeholders about what they are doing on sustainability is another story. Too often communications efforts are disjointed, incomplete or chaotic. As a result, companies are not getting the credit they deserve for their work in this area.
On the other hand, some ESG reporting is non-transparent, window-dressing, or could rightly be desdcribed as dishonest. The problem is particularly acute in the U.S., where a lack of standards and expertise have made it difficult even for experts to determine what information is real and what is fake.
The problem is particularly acute in the U.S., where a lack of standards and expertise have made it difficult even for experts to determine what information is real and what is fake.
The problem is so bad a whole new term was created for this problem known as “greenwashing,” or claiming progress where none has been made. Greenwashing has become a risk in itself as investors seek sound financial information and punish those who fail to deliver.
A new report we helped produce and release recently showed that American companies do a particularly poor job in comparison with their Asian and European counterparts. Known as the Global ESG Monitor, the report showed that there is a greater culture of regulation and reporting standards overseas. This has a big impact on US companies doing business internationally as they often will be evaluated on more rigorous terms.
Meanwhile, in the U.S., the Securities and Exchange Commission (SEC) is moving toward required standards which will have a direct effect on American businesses.
Over the last two years, Xenophon Strategies has been working with clients to improve their ESG rankings and sustainability efforts by improving their reporting. Our goal is to spread the news on how to do it far and wide.
That’s why we are proud to be the American partner in the GEM report. It is a novel approach to ESG analysis that ranks the companies that do the best job of disclosure. The scoring and ranking is based on the transparency of non-financial ESG reporting at leading publicly-traded companies. To be clear, the report does not measure whether companies are sustainable and responsible in addressing risks. Rather, it measures how well they communicate about their sustainability and responsibilities and risks.
“This uniquely American report shows room for improvement across the board – particularly among the tech companies who have a large influence on society.”
We work with clients to identify what concerns exist through a stakeholder survey, and what is mere noise. Our efforts help companies prioritize real threats through a sophisticated materiality analysis. We help them turn this information into compelling, accurate ESG reports that are based on verifiable data, and published in accord with the most common standards and practices for ESG reporting. This, in turn, helps combat claims of greenwashing, while demonstrating progress on issues that can turn into catastrophes if left unaddressed.
Our Global Report from December provided a broad overview of companies worldwide, highlighting company performance and ESG disclosure trends across continents. Now, this new report is back with a look at how prominent American corporations disclose their ESG data, highlighting the Dow Jones index and other leading companies in the S&P 500. This uniquely American report shows room for improvement across the board – particularly among the tech companies who have a large influence on society.
You can download the newest GEM USA at no cost to see where your company ranks compared to its peers, and gain greater insight into how the best companies report their ESG efforts.
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We would love to help your company further with ESG reporting. Specific company and sector reports can be custom produced to meet any corporation’s specific needs, regardless of size.
Please let us know if you’d like to talk more. And don’t forget to download your report HERE