The company is taking steps to include material and important (but not material) ESG information
Software provider Autodesk sends out a separate sustainability report that accompanies its proxy statement in an effort to stay ahead of the curve when it comes to ESG disclosure. Ben Thompson, director of sustainability & foundation at the firm, says it is important to be as informative and transparent as possible with investors when it comes to ESG disclosure.
‘We are not climate risky as a software company, but by disclosing ESG [information] we can tell investors we are a safer bet and a better bet [than other companies] because of the work we do in the space,’ he says. ‘We’re trying to get our standards up to the highest levels they need to be to help our shareholders make the best decisions.’
Autodesk includes its ESG information in the company overview section of its proxy statement. On the environmental side, it elaborates on topics such as greenhouse gas emissions related to its cloud and data centers. In terms of personnel, Autodesk focuses disclosure on topics such as diversity initiatives and employee development. From a governance standpoint, Autodesk discloses its ESG strategy, accountability and data-security measures to reinforce why the company is a trustworthy data partner.
According to Thompson, most of the data on ESG is in the accompanying sustainability report, rather than the proxy statement itself. He says the report focuses on the IR space and is aimed at providing relevant data for the topics discussed in the proxy statement quickly and thoroughly. ‘It’s very factual and data-oriented,’ he says. ‘It is less than 20 pages, and is designed to be really quick for analysts to pick up the information they need.’
Thompson says Autodesk’s sustainability & foundation team ‘acts as the hub’ in ESG initiatives and disclosure. The team works closely with executive leadership across the company in business strategy, finance and IR departments to develop and implement ESG strategy.
‘We’ve been working on this for more than a decade now,’ Thompson explains. ‘We know this space really well: it’s about providing the information people need, and that is relevant.’
Thompson says right now there is a small group of investors that sees ESG as a box-ticking exercise, but they will have to become more in tune with ESG issues as investor demand continues to increase. Bespoke ESG analysts and funds continue to proliferate, and it’s a trend that’s only going to continue. A key going forward, Thompson says, is clearing up the ‘alphabet soup’ of organizations that issue ESG recommendations, including the Climate Disclosure Project (CDP), Global Reporting Initiative (GRI), SASB and the TCFD.
‘We look to these groups first to figure out the expectations coming from industry,’ he explains. ‘SASB has taken an industry-by-industry approach. It tells you what experts think you should disclose and gives you standards and metrics that are relevant to you. Companies spend a lot on this cottage industry. The future needs to be focused on saying what’s really important and not overwhelming our shareholders.’
When it comes to standards, there is a lot of conversation about whether it is appropriate to include ESG information that is important but not material to a company in the proxy statement. Thompson says this is one area in which he would like to see the standards bodies working with investors to help articulate the most important information for shareholders. ‘We need to have a clear standard that our shareholders can get behind,’ he says.
He adds that, ultimately, the proxy statement is only one way for companies to disclose their ESG information. ‘It’s never going to all be in the proxy,’ he points out. ‘Investors want to hear stories, and analysts are people, too. They’re always looking for other sources to build their full model and perspectives. We talk about impact measurement and impact reporting in our marketing to make our stories more rigorous and not just fluff.’