Author Details

Gaurav Trivedi

Gaurav Trivedi

Vice President, MSCI Research

Samantha Sue Ping

Samantha Sue Ping

Vice President, ESG Research

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Corporate ESG Disclosure: A Health & Safety Case Study

  • We looked at health & safety (H&S) disclosures over the last few years to examine trends in corporate ESG disclosures and the current state of play.
  • Defying the conventional wisdom, the disclosure gap between developed-market and emerging-market companies has narrowed in recent years. But small-cap issuers still report less than large- and medium-cap companies.
  • Data on audit procedures was common; conversely, data on H&S performance as a factor in executive compensation was rare.


How good a job are corporations doing in disclosing ESG policies and data to investors and other stakeholders? As the volume of regulations and guidance targeting corporate ESG disclosures globally has soared in the past few years,1 we have seen institutional investors seeking more transparent and consistent ESG data to facilitate better engagement with corporations and to incorporate ESG considerations in their investment decisions.

We could find no published studies, however, quantifying ESG disclosure trends at a granular level or that compared corporate reporting practices across various markets and capitalization sizes. This information could help institutional investors better identify engagement targets or areas for additional due diligence.

To shed some light on this area, we took an in-depth look at reporting of health and safety (H&S) disclosures. This area has gained fresh salience for both companies and investors amid the global pandemic. Our findings confirmed some common assumptions and upended others.


COVID-19 Put the ‘Health’ Back in ‘Health & Safety’

The COVID-19 crisis has forced many companies to take a closer look at workforce management, including employee well-being. While H&S practices have long focused on preventing injuries and fatalities, keeping workers healthy suddenly seems at least as important. With a baseline reading on H&S reporting as of now, we will be better able to see what changes occur as these issues become more prevalent for many industries in a post-COVID-19 world.

We looked at six H&S metrics across companies in industries with historically high injury rates — i.e., those historically most exposed to business risks in this area — from 2015 through 2019. These companies were all constituents of the MSCI ACWI Investable Market Index (IMI) as of Aug. 31, 2020, with 1,572 companies across 63 of 158 Global Industry Classification Standard (GICS®)2 sub-industries. Each company in this set had information on at least one H&S metric.

We sought answers to two key questions:

  • Which metrics saw the biggest increase in the number of companies reporting?
  • Were there differences based on size or market?


What’s Disclosed, What’s Not

Disclosure of H&S audit measures had the highest level of reporting overall as of 2019 (89% of companies) and experienced the largest increase in transparency over time (from 59% in 2015). In contrast, information around executive compensation linked to companies’ H&S performance was widely lacking. With COVID-19 sharply illustrating the business-continuity implications of workforce H&S, greater transparency into executive accountability for H&S management could be an area for investor engagement not only during this crisis, but beyond.


Disclosure Trends in H&S Metrics (2015-2019)

How to interact with this plot: At the bottom, first select an H&S metric to chart its disclosure trends. Hover the mouse over the bars to see details. Use the legend on the right to highlight only Disclosed or Not disclosed bars.


We looked at companies where data was available through the 2015-2019 period; some metrics only had data available beginning in 2017. Source: MSCI ESG Research LLC, company disclosures


Emerging-Market Firms Not Far Behind Developed-Market Counterparts

The most extensive H&S disclosures came out of large and medium developed-market (DM) firms. But their emerging-market (EM) counterparts were not as far behind as widely perceived3 and countered our own assumptions. In fact, for two of our six metrics — H&S certifications and audit measures — EM companies were more likely to disclose data. This could be driven by regulatory requirements, as well as enhanced scrutiny and pressure by various stakeholders (e.g., investors and nongovernmental organizations), given the historical lack of transparency into these systems.

Not surprisingly, we found that small-cap firms reported less often across all metrics. In our experience, smaller companies have tended to have fewer resources to devote to public ESG reporting.

We have seen markedly rising interest in our research from EM and small-cap companies over the past several years, with 33% and 21%, respectively, interacting with us in 2019 — up from 4% and 1% in 2014. We typically view our communications with issuers as a proxy, albeit a rough one, for broad awareness of relevant ESG factors. If that awareness is a precursor to more public disclosure, we may see a further closing of the gaps between DM and EM and between large- and mid-cap, and small-cap companies in the coming years. It is also important to emphasize that we did not examine improvements in the quality of ESG disclosures.


Comparing Disclosure by Geographic Market and Size

How to interact with this plot: At the bottom, first select an H&S metric to chart its disclosure trends. Hover the mouse over the bars to see details. Use the legend on the right to highlight only Disclosed or Not disclosed bars.


DM = developed markets; EM = emerging markets; L&MC = large- and mid-cap, SC = small-cap companies. Initial observation = the first time we recorded data for the company. Current observation = the current state of disclosure for the company, as of Aug. 31, 2020. Source: MSCI ESG Research LLC, company disclosures


In short, it’s clear that market-cap size bias does hold true when it comes to disclosure availability, at least as far as health & safety metrics show. However, the conventional wisdom that there’s a wide gap between disclosures in developed-market and emerging-market companies may be a myth. While this is just one case study, overall disclosure trends have improved across all cap sizes and markets. Similar analysis for other ESG issues of interest could aid institutional investors in identifying key topics and trends for engagement.


1Lee, L.-E. and Moscardi, M. 2019. “2019 ESG Trends to Watch.” MSCI Research Insight.

2GICS is the global industry classification standard jointly developed by MSCI and Standard & Poor’s.

3“Challenging the status quo of ESG investing in emerging markets.” Mobius Capital Partners, June 8, 2018.


Further Reading

Rethinking Health & Safety

2019 ESG Trends to Watch