A new study released by Disability:IN found that the majority of European and U.S. Fortune 500 companies are including disability in their sustainability or environmental, social, and governance (ESG) reports. In Europe, 72% of companies disclose disability in their reports, compared to 65% in the U.S. These numbers are expected to increase as sustainability reporting becomes mandatory in the EU and other jurisdictions starting in 2025.
ESG investing considers non-financial factors in addition to traditional financial data. To meet the demands of fund managers and investors interested in ESG factors, companies have started releasing annual ESG reports. While ESG reporting has been voluntary in the past, regulations are being adopted globally, with most set to go into effect in 2025. Companies are left to decide what to include in their ESG reports, and throughout this process, materiality plays a significant role.
Materiality, a concept used in both financial and non-financial reporting, is essential in the development of sustainability reporting standards. The U.S. uses a single materiality standard, while the EU has adopted a double materiality standard, considering the interests of stakeholders alongside those of shareholders. This has created challenges for companies operating in multiple jurisdictions due to conflicting laws.
Although the EU companies may provide generic statements of compliance with the EU Charter of Fundamental Rights, the tracking and disclosure of statistics related to disability may be lacking. The decision to disclose such information is a matter of materiality, with companies considering whether including disability-related data in their reports could influence the decisions of investors. The study by Disability:IN analyzed where the disclosures fit in the European Sustainability Reporting Standards.
In the U.S., ESG reporting is voluntary, with a focus on climate-related risks. The SEC has recently adopted disclosure standards, though litigation over the agency’s authority to enact such a rule has put the implementation on hold. Disability inclusion in U.S. companies’ ESG reports typically falls under the social category as part of their diversity, equity, and inclusion (DEI) policies. However, only 65% of U.S. Fortune 500 companies include disability in their ESG reports, and only 10% provide data on disability workforce participation rates.
The study conducted by Disability:IN highlights discrepancies in disability disclosure among European and U.S. companies. While 30% of EU companies disclose disability workforce participation rates, the accuracy and level of data provided vary among both regions. In the EU, the percentage of employees with disabilities is 3.1%, compared to 6% in the U.S. Overall, the report underscores the importance of integrating disability in ESG reporting to enhance transparency and accountability.
The study was compiled by researchers at Disability:IN, a nonprofit organization advocating for business disability inclusion. The report sheds light on the current state of disability inclusion in ESG reporting and the challenges faced by companies in disclosing such information. As sustainability reporting standards continue to evolve globally, the inclusion of disability in these reports will likely become more prevalent, reflecting a growing emphasis on diversity, equity, and inclusion in corporate practices.
