For the fourth straight year, Microsoft was cited by foreign equity external managers working for Japan’s $2 trillion Government Pension Investment Fund as having the best sustainability disclosure. According to a survey of the managers, the tech giant’s disclosures offer “depth, targets, and transparency around both progress and setbacks.”
The 44 managers who responded to the survey cited 203 companies for having “excellent materiality-focused sustainability disclosure,” while only six companies received nominations from at least five. Microsoft was tops, with seven managers nominating the company, followed by Unilever with six. Italian energy firm company Enel, British pharmaceutical company GSK, French cosmetics company L’Oreal and French energy company TotalEnergies received five nominations each, while seven others were praised by four managers.
The GPIF noted that because “disclosure requirements differ across countries and regions … a wide variety of disclosure formats were observed.” It also noted that, “among the disclosures selected as examples of excellent sustainability disclosure, Sustainability Reports accounted for the largest share at 30%. … This was followed by Annual Reports at 8%, while Integrated Reports and Impact Reports each accounted for 4%.”
The report did not identify which asset managers made which specific comments about the companies’ disclosure efforts.
The managers’ comments about Microsoft stated that the tech firm “explicitly engages with sustainability reporting standards and ESG frameworks.” They said the company shows a “deep familiarity” with investor-grade disclosure requirements. Comments also noted that the company “is doing a good job in disclosing [its] efforts to be clear about how and why [it makes] specific decisions” concerning its design of AI systems: “Their annual transparency report is a great example of how a company can increase trust in an area that will always be difficult to manage due to differing societal and culture values.”
The managers also lauded Unilever for reporting a strong link between sustainability and performance: “The discussion of climate, plastics, human rights and supply-chain risks is well aligned with global standards such as [the Task Force on Climate-related Financial Disclosures].”
Managers also said Unilever provides “practical examples of how sustainability is shaping product and packaging innovation across its major brands” and noted that the company’s sustainability disclosures meet all Climate Action 100+ climate disclosure criteria.
Italian energy company Enel’s disclosure of climate-related information that meets TCFD recommendations was also cited: “Enel SpA effectively disclose their climate targets, including being committed to increasing the share of the electricity sold at a fixed price covered by carbon-free power generation.”
Regarding GSK, managers remarked that it has “particularly strong nature disclosures,” and it was one of only three companies with nature targets validated by the Science Based Targets Network. “GSK’s responsible business disclosures are comprehensive and externally assured, covering access to medicines, global health, environment, inclusion, ethics, and product governance,” according to the report.
L’Oréal’s sustainability metrics were cited as being “extensive and supported by clear performance indicators,” according to the managers. “The company reports strong progress across climate, resource efficiency, circularity, biodiversity, and social inclusion metrics.” The managers also praised the company for recycling or reusing more than half of the industrial water it uses.
Meanwhile, TotalEnergies was recognized for its disclosure of details about its approach to sustainable development and commitment to it. The GPIF report stated that TotalEnergies “provides detailed description of [the] due diligence process to protect human rights in local communities in alignment with the United Nations Guiding Principles on Business and Human Rights.”
Tags: Disclosure, Enel, Government Pension Investment Fund. GPIF, Microsoft, Sustainability, Unilever