(London) – A coalition of global investors from 13 countries, managing over US$2.1 trillion of assets, today added its voice to the increasing calls for better corporate reporting on environmental, social and corporate governance (ESG) activities.
The international investor coalition is writing to 86 major companies urging them to honour the reporting requirements of the United Nations Global Compact, the world’s biggest voluntary corporate responsibility initiative. Each of the 86 “laggard” companies has previously joined the UN initiative but failed to produce the mandatory annual report on how it puts the initiative’s ten principles into action.
This is the third year that investors have engaged with UN Global Compact participant companies on the issue of transparency. In 2008, the engagement resulted in 33 per cent of “laggard” companies subsequently submitting their reports, in 2009 positive responses increased to 47.6 per cent (50 out of 105 companies), including from firms such as BHP Billiton, Severn Trent, The Gap and LVMH.
The status of all companies included in last year’s engagement can be found here.
The investor coalition also praised 44 companies, including Bayer, Nikon and Inditex, for producing high‐quality sustainability reports deemed useful for investors. A full list of ‘leaders’ can be viewed here.
Steve Waygood, Head of Sustainability, Research and Engagement at Aviva Investors, one of the investors involved in the coalition, said:
“Almost 50% of companies responded positively to this investor coalition last year and I expect responses to be even higher in 2010. Last month’s publication of new interpretative guidelines for ESG disclosure by the US Securities and Exchange Commission has underlined the massive momentum on this issue. “ESG issues are now a vital part of corporate reporting. A company’s ability to manage and mitigate exposure to ESG issues is an important factor for many mainstream investors, and if companies do not report then investors cannot make sound investment decisions.”
The investors in the coalition are all signatories to the UN‐backed Principles for Responsible Investment Initiative („>www.unpri.org), and include funds such as Aviva Investors, Boston Common, and Nordea Investment Funds. Principle 3 of the PRI asks investors to seek better and more systematic disclosure from the entities in which they invest. This shareholder engagement is the type of activity that PRI signatories are undertaking to promote this Principle.
James Gifford, Executive Director of the PRI added,
“Companies that want to attract capital now recognise that reporting of issues such as carbon emissions and corporate governance is becoming as important as the reporting of traditional financial issues. In the wake of the financial crisis, many investors believe that analysis of ESG issues is part of a more holisitic approach to assessing a company and managing risk”.
Gavin Power, Deputy Director of the UN Global Compact added,
“We welcome the proactive role these investors are taking to protect the integrity of the UN Global Compact. The most critical challenges of our time – from the global recession to climate change, from humanitarian crises to abject poverty – require a collective response involving investors, the corporate sector and all societal actors”.
The PRI and UN Global Compact (UNGC) initiatives are engaged in a number of mutually reinforcing activities including the ‘Seoul Initiative’, an investor engagement urging companies around the world to sign the UN Global Compact. By November 2009 this had resulted in 108 more companies joining the UNGC, constituting 25% of all new publicly listed UNGC participants between November 2008 and October 2009.
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