How Sustainability Disclosure Creates Competitive Advantage Today's entrepreneurs can position themselves ahead of the pack as more investors integrate environmental factors into their decisions.

Every entrepreneur dreams of an IPO and the day the world recognizes the company's worth. But do markets have the information needed to assess a company's true value?

Today's entrepreneur visualizes the success of his or her business in a much different world than business leaders of past decades. Contemporary global challenges include climate change, rapid population growth and resource scarcity. Today's entrepreneurs are responding by developing products and services to meet those needs. They are seizing the opportunity to build sustainable businesses from the ground up.

For example, B corporations are explicitly committed to social and profit goals. Because social and environmental performance is part of the DNA of these companies, shareholders can sue its directors for failing to uphold sustainability goals. Worldwide there are now more than 1,000 B Corps, including Patagonia, Etsy and Seventh Generation.

Related: Honor Among Business Owners: These B Corps Are Building a New Code for Corporate America

By putting sustainability at the core of their strategies, today's entrepreneurs can position themselves ahead of the pack as more investors integrate sustainability factors into investment decisions. That's the good news.

The bad news is that once these companies go public, the focus still remains on profit and loss, the same as it was decades ago. The markets have not caught up. Investors lack the information they need to assess and compare sustainability performance.

Take Soda Stream, an Israeli company that allows consumers to create carbonated beverages at home using tap water. The company went public on Nasdaq in 2010. Soda Stream's product addresses several sustainability concerns: It eliminates reliance on high-risk water supplies for beverage manufacturing, reduces packaging, reduces the carbon emissions associated with shipping and allows consumers to control the sugar content of their beverages.

Investors can compare financial fundamentals for companies, but for sustainability fundamentals -- packaging, water use, carbon emissions, and nutrition -- no comparable information exists. Markets don't provide investors with the information needed to understand Soda Steam's sustainability innovation and reward its positioning for future success on these critical dimensions of sustainability for the food and beverage industry.

Related: Twitter Co-Founder Launches 'World Positive' Investing Fund

My organization, the Sustainability Accounting Standards Board was created to solve this problem. It issues industry-specific sustainability accounting standards for publicly listed U.S. companies. The standards are designed to guide the disclosure of material sustainability information in the management-discussion-and-analysis section of Securities and Exchange Commission filings, such as the Form 10-K and 20-F.

The standards help investors compare performance and direct capital to the most sustainable outcomes. And, the standards can help entrepreneurs identify and manage the sustainability issues most likely to impact financial success.

Entrepreneurs are designing their businesses with sustainability challenges in mind. This is a competitive advantage. But in order for this competitive advantage to be recognized once companies go public, companies need to convey their differences to the capital markets, in a way that's comparable. This is the problem the board helps solve.

Unlike longstanding corporations that must find ways to incorporate sustainability into long-used ways of doing business, today's entrepreneurs are building sustainable companies from the ground up. This is the type of innovation that's needed to fuel today's markets. And this is the type of innovation the markets must reward, by letting the information be known.

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