Sustainability Disclosure on the Horizon

2/17/2015

By Kyla Fisher, President, Three Peaks Consulting

Even though 80% of investors today consider sustainability issues when making investment decisions, there is currently no standardized method for measuring and disclosing sustainability performance. To fill this gap, the Sustainability Accounting Standards Board (SASB) has begun to develop sustainability accounting standards—including those for the packaging industry.

Intended to compliment financial disclosures, SASB’s standards provide industry-specific metrics for companies to use in disclosing their environmental impact, as well as social, humanitarian, and governance policies. SASB plans to develop such standards for more than 80 industries in 10 sectors through 2016.

The standards are designed to give investors a comprehensive view of a corporation’s sustainability risks and opportunities so that they may compare the relative merits of the companies in any given industry and direct capital to those with the most sustainable offerings. Research analysts may also use SASB disclosures to get a more complete view of a company’s performance.

Of note to the paperboard packaging industry is SASB’s Containers and Packaging Standard, which contains metrics for greenhouse gas emissions, energy management, air quality, water management, hazardous materials management, product safety, lifecycle management, and materials sourcing. Converters may be able to use these metrics to understand industry-wide challenges and better allocate resources. However, given the diverse nature of the packaging industry, PPC has cautioned against any use of these metrics to draw comparisons between packaging companies.

Considering that SASB champions just such peer-to-peer evaluation—and considering SASB’s growing momentum and support within the investment community—converters may want to familiarize themselves with the standard and begin collecting data prior to the release of the final standard in March 2015. In addition to attracting the investment community, measuring sustainability performance will help converters better manage nonfinancial resources, as well as attract CPGs looking to reduce their own sustainability risk.

PPC is currently providing SASB with input on the packaging standard as well as another standard for the forestry sector. For updates on this developing issue, follow PPC on Twitter, like them on Facebook, or sign up for their newsletter.  

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