Wespath Benefits and Investments (Wespath) and its Wespath Investment Management division believe that environmental, social and governance (ESG) factors can have a significant impact on corporate financial performance. We began encouraging companies in 2003 to publicly report on their ESG policies and practices. These reports are commonly called “Sustainability Reports” or “Corporate Social Responsibility Reports.” A growing body of research supports Wespath’s position that sources of financial risk–and opportunity—may lie within the pages of these reports.
Sustainability most commonly refers to “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” This is the definition developed by the World Commission on Environment and Development (sometimes known as the Brundtland Commission) in 1987. In the corporate world, sustainability involves conducting business so as not to negatively affect long-term viability, shareholder value, the environment or stakeholders (including consumers, employees and local communities).
Investors and consumers are increasingly recognizing the importance of sustainability. Many companies have responded by improving disclosure of business policies, practices, goals and progress related to environmental and social issues. The reporting process is often a catalyst to identifying key sustainability challenges and opportunities—companies frequently report such benefits as lower costs, less waste and increased productivity.
The United Methodist Church recognizes that “corporations are responsible not only to their stockholders, but also to other stakeholders: their workers, suppliers, vendors, customers, the communities in which they do business, and for the earth, which supports them. We support the public’s right to know what impact corporations have in these various arenas, so that people can make informed choices about which corporations to support.” (¶163I of The Book of Discipline.)
In addition, Resolution 4071 (Investment Ethics), recognizes that one of the policy goals of the Church is to “persuade corporations to integrate responsible business practices on environmental, social and governance issues into their operations and to be transparent in monitoring and documenting these practices in public reports.”
Wespath has engaged a wide range of companies regarding the development of sustainability reports in the belief that sustainable companies generate greater value for investors.