Does sustainabilit reporting make successful companies?

See the full PwC GMA financial report here [pdf].

An analysis of the financial performance of CPG companies alongside sustainability reporting shows companies that report have stronger financial results. Disclosure on sustainability, particularly greenhouse gas emissions, continues to spread through the corporate world, and the information flow—whether through Bloomberg terminals, supplier sustainability scorecards, or annual reports—keeps growing. In 2010, 70% of S&P 500 companies submitted voluntary disclosures to the Carbon Disclosure Project (CDP),up from 56% in 2007.

Of interest in the article: PwC looked at the financial performance of CPG companies that produced sustainability reporting, versus those that didn’t – and concluded that sustainability reporting companies were on average, more successful than their counterparts

•  Reporting companies had a high gross margin
• Reporting companies had a high median SG&A spending as a percent of sales
• Reporting companies had a higher free cash flow to sales performance
• Reporting companies had a higher return on sales

The caveat with all of this is, of course, that correlation doesn’t necessarily equal causation.

• Are reporting companies more successful because they report, or,
• Are successful companies reporting more because they have the luxury to do so; value transparency and sustainability reporting; and the capability that makes them a success financially, also makes it easier for them to produce sustainability reports (as the measuring just ain’t easy)

I’m willing to bet on the second bullet.