11 April 2018, Geneva Switzerland: Today, the World Business Council for Sustainable Development (WBCSD) in partnership with the Yale Initiative on Sustainable Finance and the Global Reporting Initiative (GRI) released “Materiality in corporate reporting,” a White Paper focused on corporate disclosure of environmental, social and governance (ESG) issues in the food and agriculture sector.

The paper highlights how food and agriculture companies decide what’s important (i.e. material) when considering ESG issues in decision-making.

To date, there’s no agreed upon process for deciding which ESG issues might be most material to a company. This is a problem because without such processes, companies can’t demonstrate the potential impacts of certain ESG issues to investors in a comparable and decision-useful way.

Better processes for identifying, understanding and disclosing ESG-related risks and opportunities will help change the way reporting, decision-making and financial allocation work to achieve sustainable outcomes, such as the Paris Agreement and the Sustainable Development Goals.

The goal of this research is to help develop those processes.

“Our aim is to encourage discussion on practical measures that address challenges associated with materiality assessment and judgements in decision making and reporting,” said Lois Guthrie, Director of Redefining Value at WBCSD. “We are looking at how judgment should be applied when various, potentially conflicting factors, such as risk assessment, stakeholder views, financial performance and value creation are taken into account in materiality determination.”

Material ESG issues in the food and agriculture sector have widespread implications for decision-making and the future of sustainability. This is because the sector plays a critical role in the most pressing environmental and social challenges of our time including climate change, land degradation, health and food security.

The white paper focuses on 96 publicly traded companies in the food and agriculture sector.

Findings include:

  • There are well-described practices for identifying material ESG issues, but there’s significant variation in how companies do so
  • There’s conformity around some ESG issues like GHG emissions and severe weather
  • There’s a disconnect between sustainability reports and the mainstream annual report
  • The criteria used by companies prioritize and address material ESG issues are not clear

This research and the materiality roundtable series support the next phase of this project: developing guidance to help companies identify decision-useful information for disclosure to an audience of investors.

This project is part of the Conservation and Financial Markets Initiative, a five-year effort of the Gordon and Betty Moore Foundation that aims to leverage the power of mainstream financial markets in order to help drive the food sector away from practices that degrade natural ecosystems.

About the Yale Initiative on Sustainable Finance

The Yale Initiative on Sustainable Finance (YSIF) is a joint program between the Yale Center for Business and the Environment and the Yale Center for Environmental Law and Policy. Through applied research and multidimensional collaboration, YISF seeks to answer some of the most challenging questions facing investors interested in sustainability.