DJSI Industry Group Leaders 2017
Human Resources (HR) was a top theme for Industry Group Leaders 2017, in particular employee compensation and benefits, workforce diversity and inclusion, employee development, occupational health and safety…
By comparison, the new Human Capital Score developed by RobecoSAM focuses on human capital development, talent attraction and retention, as well as labour practices and human rights.
HR was followed by climate and ethics as top themes. On climate, the material topics of most interest appeared to be greenhouse gases, energy use and efficiency, as well as renewables and other alternatives. On ethics, the two dominant material topics were anti-corruption and business ethics, the second and third most emphasized topics following employee compensation and benefits in the annual non-financial and financial reporting by the Group Leaders.
This appears from our latest analysis of twenty four leading sustainability corporates defined by RobecoSAM based on their 2017 sustainability assessment of 867 companies for the Dow Jones Sustainability Indices (DJSI). Our own findings on key material topics this year is based on most emphasized topics in their full suite of reports – sustainability, integrated and annual reports – identified through automated analysis by our partner eRevalue using their Datamaran business intelligence platform.
The automated analysis also allows for comparison of most emphasized topics in the annual sustainability reports (18 SRs) and integrated reports (4 IRs) versus annual financial reports (23 ARs) of the DJSI Industry Group Leaders announced in September 2017. As signaled in our analysis last year, the theme of governance receives greater attention in ARs than SRs or IRs. While the only governance related theme among the top 20 most emphasized topics in their SRs and IRs is “stakeholder inclusion”, the ARs have four governance-related topics among their 20 most emphasized topics: shareholder activism (#2), executive compensation (#5), board composition (#15) and investor relations (#16).
Our analysis last year showed that while the top 20 topics formally stated as most material in IRs or SRs include external development-related topics such as “community impact” and “access”, these topics do not feature among the top 20 topics most emphasized in the reporting narratives. This was again evident this year, even while the DJSI is showing greater interest in impact valuation to assess if companies are measuring and valuing their broader societal impacts focused on outcomes. The automated analysis showed that the external developmental dimension is most addressed by three terms appearing among the top 20 most emphasized topics in SRs and IRs, namely human rights (#12), philantrophy (#17) and community support and development (#18).
From its overall database of company reports, Datamaran does however detect a substantial increase of references to the Sustainable Development Goals (SDGs) since 2015. Looking at the 20 Industry Group Leaders, our analysis again shows that coverage of the external development-related themes is likely to be less common in ARs. The most related common topic referred to here is human rights, which appears in position #12 among the top 20 most emphasized topics in their ARs.
A newcomer theme among the most emphasized topics is that of “non-financial accounting” in SRs and IRs. This is detected through the search of terms such as true cost, balanced scorecard, integrated reporting and sustainability reporting, identified in conjunction with terms such as procedure, audit and assurance and reference to standards or frameworks for non-financial accounting or reporting. While non-financial accounting does not appear as a top theme in ARs, the topic “long-term value” does appear as #18 among the top 20 most emphasized topics in ARs by the Group Leaders. It also appears as #5 among the top 20 topics most emphasized in the four IRs published by Group Leaders.
Past analysis by Materialitytracker of reporting by the 24 Group Leaders showed that formally stated key material topics include generic business terms such as strategy execution, innovation and product excellence. Yet these terms appear less emphasized in reporting narratives. The software analysis of the narratives this year does show that the business theme of “customers” appears, more commonly in the ARs and IRs, with reference to the topics customer privacy and information security (#8 in ARs, #19 in IRs), customer satisfaction (#11 in ARs, #15 in IRs) and reputation (#13 in ARs, #18 in IRs).
The top 20 topics from our analysis are listed in the table below, showing the results from the automated analysis of the non-financial, financial and all reports combined.
Table 1: Top twenty issues for 24 DJSI Industry Group Leaders of 2017
An automated analysis of the same reports (SRs, IRs and ARs of the same 24 companies) was performed by the Datamaran narrative data analytics platform, covering the same reporting year. This detected the topics most emphasized. The Datamaran ontology 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). eRevalue has an online database of 55,000 corporate reports of publicly listed companies, and can provide further sectoral analysis for clients. For more information on the analysis contact Felix Dauth, insights manager at Datamaran: felix@datamaran.com
Figure 1: Most emphasised topics in reports by DJSI Industry Group Leaders of 2017 (Source: Datamaran)
