How candor in sustainability reporting benefits companies and stakeholders
“We don’t like glossy,” said the CEO of a major social responsibility investor with billions of assets under management. Read More
- When companies issue sustainability reports marked by clear, business-aligned and integrated sustainability strategy, performance data and candid discussion about successes and shortcomings, they’re rewarded by Wall Street.
- Institutional investors regard such companies as well-managed, trustworthy and strategically understanding how sustainability supports the business.
- A variety of studies have found that anywhere from 25 percent to 60 percent of corporate sustainability claims are vague or misleading greenwashing.
What if there was a way to produce an annual sustainability report that would generate an uptick in share price on Wall Street while also meeting the expectations of environmental and social stakeholders? That sounds like a fantasy, but there is a way to have it all with sustainability reporting: It’s called candor.
That requires getting out of one’s reporting comfort zone, starting with candidly disclosing shortcomings, failings and missed targets. Our Project ROI research finds that when companies issue a sustainability report organized around a clear, business-aligned and integrated sustainability strategy, providing performance data on top priority material topics, along with candid discussion about sustainability successes and shortcomings, they are rewarded by Wall Street with a boost in share price.
Institutional investors regard such companies as well-managed, trustworthy and strategically understanding how sustainability supports the business. Companies that throw in the kitchen sink, cover all the bases, cover backsides and bore readers to sleep with fat, rosy, beautifully illustrated and vaguely worded reports don’t get the benefit of the doubt.
“We don’t like glossy,” said the CEO of a major social responsibility investor with billions of assets under management at the Responsible Business Summit earlier this month.
Below are three examples of candor that reflect the practices that Project ROI identifies.
3 examples
Williams Companies set a goal to reduce construction-related spills and releases by 10 percent from 2022. Its 2023 report disclosed that the company recorded 31 construction-related spills and releases and therefore did not meet the reduction goal. Williams acknowledged the shortfall and publicly redoubled its efforts, setting a more aggressive target of 20 percent going forward.
That report was issued on July 31, 2024. Since then the company’s share price has risen 73 percent.
Plains All American Pipeline set a safety and environmental target to have 15 or fewer federally reportable releases in 2024. Its 2024 report, issued in November 2025, said that although release volumes were 60 percent lower than the 2017-23 average, the company did not meet its 2024 target, admitting that the number of incidents exceeded the goal. Plains listed seven steps it planned to take in order to improve performance, including mitigating environmental risks, expanding staff training and encouraging employees to raise concerns without fear of retaliation.
Since Dec. 1, 2025, Plains’ share price has risen 31 percent.
Microsoft has acknowledged that it is off track in two key areas: reducing Scope 3 (indirect) emissions and reducing or replenishing water use. Its 2024 sustainability report noted that its total emissions had risen 29.1 percent since the 2020 baseline, explained why Scope 3 emissions rose and listed a five-step strategy to get back on track including improving measurement, improving efficiency, forging partnerships, building markets and advocating for public policy.
Since then Microsoft’s share price has risen by more than 12 percent.
The path of candor
Of course these price movements are driven by a range of factors beyond sustainability reporting, including the general rise in stock markets over the past few years. But our research shows that companies that candidly acknowledge shortcomings have not been punished by big investors
This roadmap to good reporting is valued beyond Wall Street. Most reporting frameworks, including the original version of the EU’s Corporate Sustainability Reporting Directive framework, encourage companies to follow it.
That’s not easy when sustainability leaders are under pressure from restive shareholders, harried executive leadership and political headwinds. But our research shows that companies that hide behind excess verbiage and less-than-transparent disclosures get punished by Wall Street.
“We’ll note when we miss a target,” one sustainability head said during a panel sessions with big companies from the manufacturing, retail, and healthcare sectors at the same conference, when asked how they share sustainability shortcomings. “But it’s always in the context of good examples and successes we’ve achieved throughout the year.”
In many instances, these leaders are skittish about the wrong side of the risk coin.
A variety of studies have found that anywhere from 25 percent to 60 percent of corporate sustainability claims are vague or misleading greenwashing. This has led to the proliferation of anti-greenwashing laws across countries and states to protect against actions that put the credibility of corporate sustainability at risk.
Companies that hope to use sustainability reports to support the brand and/or to mitigate risk will do better to share the unvarnished truth with humility and a clear plan to improve. They acknowledge shortfalls, provide non-defensive explanations and define a clear set of corrective actions. Some recommit or amplify targets. In most scenarios they do not receive blowback, criticism, negative press, or litigation. Most are given grace and space to adjust and adapt. Candor is appreciated and rewarded.
