The popular corporate equity “baskets” including: the Dow Jones Industrial Index, Nasdaq 100, S&P 500, the Russell 1,000 - 2,000 - and 3,000– in essence consists of the underlying value of the corporate shares.
Today, there is an ocean of stock indexes for asset managers to license from the creators and then apply process and approaches for keeping track of the companies in the fiduciary portfolio, or to analyze and pick from the underlying issues for their portfolio.
Alternative benchmarks and indexes may be dependent on market cap size and have variations in the index family to fine tune the analysis (think of the varieties of Wilshire, Russell, S&P Dow Jones, etc.). There has been a steady move of many asset managers to passive instruments, with this transition key benchmarks become an important tool for the analyst and portfolio manager.
One large-cap index really dominates the capital markets: The S&P 500.
G&A Institute’s Annual S&P 500® Research
Almost a decade ago, the team at G&A Institute began gathering corporate reports to build our models and methodology for guiding client’s corporate disclosure and reporting -- and focusing especially on the structured reports of U.S. publicly-traded companies -- selected the universe of companies that the index creators include in the S&P 500 Index®.
Here’s why: The S&P 500 Index is the most-widely-quoted index measuring the stock performance of the 500 largest investable companies listed on American stock exchanges. Asset managers licensees like State Street, MCSI, Invesco Capital and London Stock Exchange Group use this index for their constructing ETFs and other investable products.
This universe of public companies provided for our team a solid foundation for tracking and analyzing the activities of these 500 companies as they began or expanded their sustainability reporting. In 2011, that first year. we found just about 20% of the 500 were publishing sustainability reports.
And here’s the dramatic news:
G&A's just-completed report shows 90% of the S&P 500 companies produced a sustainability report in year 2019!
Tracking the Trends
Over the decade of close tracking and analysis of the 500 companies in the index, the good news is we saw the number of reports steadily grow. We charted the broad impact of these market-leading enterprises on such reporting frameworks and standards as the GRI; SASB as those standards evolved and matured and were adopted by the 500; CDP disclosure in structured reports; the adoption of UN Sustainable Development Goals (SDGs) as they were in some way a part of a company’s sustainability strategy (and subsequent reporting); and more recently,adoption of TCFD recommendations by corporate issuers in the U.S.
Starting with 2010 reporting, the first G&A analysis, we’ve shared the highlights of the research efforts. Teams of talented, passionate and bright analyst-interns developed each year’s report (you can see who they are/were in G&A’s Honor Roll on our web site). Most of the team members have moved on to career positions in the corporate, investment, public sector and NGO communities.
We’ve organized the deliverable for both quick scanning and concentrated reviewing. Let us know if you have questions about the research results. Stay tuned to G&A’s upcoming Russell 1000 Index® analysis of 2019 reporting.
This second important index/benchmark was created several decades ago by the Frank Russell Company and is now maintained by FTSE Russell (subsidiary of the London Stock Exchange Group) The largest companies by market cap companies are available as benchmarks for investors in the S&P 500 (largest cap) and for the next 500 in the Russell 1000.
The ripple effects of the S&P 500 companies and more recently some of the Russell 1000 companies on corporate sustainability disclosure and reporting is fascinating for us to track. Many mid-cap and small-cap companies are now adopting similar reporting policies and practices. Privately-owned companies are publishing similar reports. All of this means volumes of ESG data and narrative flowing out to investors – and fueling the growth of sustainable investing. We find this all very encouraging in our tracking of corporate reporting.
This is just the introduction of G&A's Sustainability Highlights newsletter this week. Click here to view the full issue.
KEYWORDS: business & trade, Corporate Social Responsibility, CSR, G&A Institute, GRI, Governance & Accountability Institute, G&A, SRI, SWF, socially responsible investing, Sovereign Wealth Funds, Sustainability, Corporate Citizenship, ESG, S&P 500® Universe