Labour or Human Capital alongside Climate and Energy were the top two thematic areas reported on by the DJSI Industry Leaders announced by RobecoSAM in Sept 2018. The third main thematic area that received most emphasis in the latest annual reports published by 48 of the industry leaders was Governance, including business ethics and corruption...


As of 2018 RobecoSAM no longer identifies a shorter list of Industry Group Leaders, but only the full list of 60 Industry Leaders taken from 60 industries represented in RobecoSAM’s Corporate Sustainability Assessment (CSA) and the Dow Jones Sustainability Indices (DJSI).  Based on automated analysis by Datamaran–business intelligence solution for non-financial risk management – the Materialitytracker assessment this year therefore covers a larger group of latest reports (financial and pre-financial) published up to October 2018 by 48 of the Industry Leaders on their performance of 2017-2018.


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The automated analysis of most emphasized topics in the annual sustainability reports (SRs), integrated reports (IRs) and annual financial reports (FRs) of the DJSI Industry Leaders shows noteworthy trends. The top 20 most emphasized topics show, as in the past, that Governance is the thematic area most covered in the FRs. The FRs published to date in 2018 by 32 of the Industry Leaders focus most on the Governance-related topics of employee compensation and benefits (#1), anti-corruption and bribery (#2), business ethics (#3), executive compensation (#8), board compensation (#9) and corporate culture (#19). While business ethics and corruption are also among a top 10 issues most covered in SRs and IRs, it is surprising that the 15 IRs published do not devote more attention to governance as part of their focus on integration in reporting, processes and thinking.

While not one of the overall list of top 20 topics covered in all reports (SRs, IRs, FRs) published by Industry Leaders in 2018, a newcomer in the top 20 topics most emphasized in the FRs and IRs is that of “digitalization”. This topic is also linked with another theme highly emphasized by all reports (#7 among the overall 20 topics): customer privacy and information security. While FRs pay more attention to customer relations (“customer satisfaction” as #7 most emphasized topic), they also display “investor relations” as a highly emphasized topic (#11 of their top 20).

Changes in the assessment criteria applied by RobecoSAM this year include climate change-related factors. The new climate strategy criteria include target setting, the use of science-based targets, the inclusion of scope three emissions, as well as further alignment with frameworks such as the CDP and TCDF. The overall list of top 20 topics show that in reporting on the last year the Industry Leaders have most emphasized the topics of greenhouse gases (#2), climate change (#9), energy use (#11), renewables and alternatives (#15), as well as energy reduction and efficiencies (#16).

A thematic area related to climate change that also receives substantial coverage in the integrated and sustainability reporting by Industry Leaders is that of resource use. Two topics included the top 20 topics of the pre-financial reports are that of water (water recycling, efficiencies and remediation - #9 in 15 IRs published and #17 in a combined list of 33 SRs and IRs published) and waste (recycling, waste management and reduction - #17 in a combined list of 33 SRs and IRs published). An interesting newcomer in the pre-financial reports list of top 20 topics is also that of biodiversity (#19). When in 2011 the company Fronesys (see Tuppen User View) did a quantitative analysis of the materiality matrices published by 31 corporations recognized for their sustainability work, it found that out of a ranked top 50 material issues disclosed “biodiversity” found itself at the bottom of the list.

The high emphasis on labour and human capital-related issues included, as in the past, the topics of occupational health and safety (#4 of the overall top 20), employee compensation and benefits (#6), employee development (#8), workforce diversity and inclusion (#10), and labour rights (#19). Related to this, with an internal and external dimension, is the topic of human rights (#5 overall, #2 for SR and IRs, #12 for FRs). In pre-financial reporting, human rights moved up significantly to #2 from position #12 among most emphasized topics last year.

Other than human rights, the only external developmental topic featuring under the top 20 is that of community support and development (#18 overall, #16 for SRs and IRs). Despite the popularity of the sustainable development goals (SDGs), leading sustainability corporates therefore do not appear to put high emphasis on explicitly “external developmental” topics in their reporting narrative. Note that while certain SDGs may be more sector-specific in their external developmental implications, the automated analysis of reports done here involves an assessment across industry sectors (one leader of each sector).

The top 20 topics from our analysis of latest annual reports by 48 Industry Leaders are listed in the table below, showing the results from analysis of the pre-financial, financial and all reports combined.

Table 1: Top twenty issues for DJSI Industry Leaders of 2018

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Methodology: Automated Analysis (using narrative data analytics)

An automated analysis of the reports (SRs, IRs and ARs of the same group of companies) was performed by Datamaran’s proprietary software, covering the same reporting year (2017-2018). Its Artificial Intelligence (AI) technology uses natural language processing (NLP) to sift and analyse publicly available unstructured datasets (text) and derive meaning from human language (narrative).

By October 2018 not all 60 but only 48 of the DJSI Industry Leaders have published their 2018 reports. Analysis detected the topics most emphasized by reporting companies. The Datamaran ontology – a universe of 100 ESG topics the platform tracks – is dynamic i.e. topics are amended and more topics included over time to ensure results reflect current developments for continuous relevance. Topic emphasis is described as High, Medium, Low or No Mention. High topics are those with a high number of hits in each source and/or frequently included in key sections of the source. Medium topics are those with a moderate number of hits in each source and/or included in key sections of the source, though found rarely otherwise. Low topics are those with a low number of hits in each source and are not included in key sections of the source.

Related terms (such as GHGs, CO2, carbon) are detected and aggregated. The related count is then normalized with reference to the size of the report, prevalence relative to other topics mentioned in the same report, plus a weighing is performed. The weighing is based on the location of a term within the report (e.g. mention of GHGs in environmental chapter; or mention in CEO Foreword). Datamaran enables data-driven decision-making by analyzing publicly available sources, such as; corporate reports, regulations, news and social media. The company captures evidence-based insights for more than 7,000 world’s largest companies and tracks all regulatory initiatives worldwide, analyzing over a million of data points. For more information on the analysis contact Felix Dauth, insights manager at Datamaran at: felix@datamaran.com

Most emphasised topics in reporting by DJSI Industry Leaders of 2018 

 

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