A coalition of institutional investors, NGOs, church groups and UN agencies, led by Aviva Investors, has today called on government representatives at the Rio+20 Earth summit to require public and large global private corporations to integrate material environmental, social and governance issues in their Annual Report and Accounts, on a report or explain basis.
A coalition of institutional investors, NGOs, church groups and UN agencies, led by Aviva Investors, has today called on government representatives at the Rio+20 Earth summit to require public and large global private corporations to integrate material environmental, social and governance issues in their Annual Report and Accounts, on a report or explain basis.
In an open letter to Ministers, Paul Abberley, interim chief executive of Aviva Investors and representative for the Corporate Sustainability Reporting Coalition (CSRC), which includes investors representing approximately US$2 trillion of the world’s funds under management, said: “A commitment from UN member states to work on an international agreement requiring companies to integrate sustainability issues in their Annual Report and Accounts, on a report or explain basis, would be a realistic, tangible and meaningful success from the Rio+20.
“Sustainability reporting is also a vital component in creating a responsible approach to capitalism. If investors continue to receive information that is short-term and thin, then these same characteristics will continue to define our markets. This is why we convened the Corporate Sustainability Reporting Coalition and we warmly welcome the leadership that the UK Government and the EU has taken so far.”
Paul Abberley continued: “This simple reporting step by companies will create the right kind of discussions within boardrooms, throughout firms and encourage investors to think about the sustainability of the firm. Today, while investors can see a company’s profit and loss statement and the underlying cash flows, they typically get little if anything about a company’s sustainability. At present 75% of companies do not report on sustainability issues at all. While this trend is improving, at the current trajectory it will be decades before sustainability reporting is common practice across global markets.
“Regular and consistent corporate sustainability information would also help governments implementing green economy programmes; monitoring the environmental and trade related aspects of the transition to a low carbon economy and understanding how company boards understand their sector’s sustainability issues.”
The Coalition now includes over 70 members such as the UNPRI, GRI, ACCA, WWF-UK and UNCTAD.
Wolfgang Engshuber, chair of the Advisory Council of the UN-backed Principles for Responsible Investment commented: "Responsible long-term investors cannot make prudent investment decisions unless they have high-quality information on companies’ exposure to long-term drivers of financial risk and return such as climate change, resource scarcity and global demographic and social changes, and the quality of their responses to them. To enable investors to do this, the PRI Initiative believes that governments should take steps to require companies to report publicly on how they have taken account of material sustainability factors or explain why they do not."
Teresa Fogelberg, deputy chief executive of the Global Reporting Initiative, said: “Making sustainability reporting common practice increases the availability of vital information to support a number of decisions from investment and purchasing to employment. For companies, sustainability reporting helps to drive change, to be fit to compete in tomorrow's economy where sustainability will count. The report or explain approach to reporting increases information for governments and markets; yet leaves companies the space to make their own reporting decision.”
Helen Brand, chief executive of ACCA (the Association of Chartered Certified Accountants), the global body for professional accountants, said: “The development of a framework for integrating sustainability information into corporate reporting is a key reform for bringing corporate reports into the 21st century. ACCA is proud to be part of this coalition, which aims to bring about the necessary and essential transparency on sustainability required for stakeholders and investors.”
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Notes to editors:
The Current EU Proposal Reads
"We acknowledge the importance of corporate sustainability reporting and we call upon the UN SG to launch a process involving governments and all relevant stakeholders in facilitating the establishment of national policies to encourage public and private companies and, where appropriate, require all listed and large public companies to integrate sustainability into their reporting cycle, or explain why if they do not.
This process should build upon the experience of already existing national and international reporting frameworks, such as the Global Reporting Initiative, and should examine options for capacity building measures in order to facilitate the adoption of sustainability reporting in developing countries based on local needs and capacities."
A useful summary of the last round of negotiations prepared by the reporting service of the conference negotiations (IISD) can be found in the IISD Earth Negotiations Bulletin (PDF 547Kb). See in particular page 5:
“On sustainability reporting, delegates agreed to defer discussion of national sustainability accounting to Section V (Framework for Action). Switzerland and the EU supported retaining a paragraph on corporate sustainability reporting, while the G-77/China expressed reservations, and the US preferred mention of best practices. At the final session, the EU introduced an alternative paragraph, which remains bracketed, calling on the UN Secretary-General to launch a process requiring large companies to report on their sustainability impacts, mentioning existing frameworks such as the Global Reporting Initiative.”
The document also mentions that if decision on sustainability reporting is supported, it would be one of the key achievements of the conference “the conference would be remembered for”.
The information and opinions contained in this document are for use by the financial press and media only. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact or advice nor should reliance be placed on these views when making investment decisions. Past performance is not a guide to the future.
Aviva Investors
Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 17 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of almost £263 billion at 31 December 2011.
Aviva plc
- Aviva provides 43 million customers with insurance, savings and investment products.*
- Aviva is the UK’s largest insurer and one of Europe’s leading providers of life and general insurance.
- Combines strong life insurance, general insurance and asset management businesses under one powerful brand.
* Based on Aviva plc Annual Report and Accounts 2011.
About the Global Reporting Initiative
The Global Reporting Initiative (GRI) produces a comprehensive Sustainability Reporting Framework that is widely used around the world, to enable greater organizational transparency. The Framework, including the Reporting Guidelines, sets out the Principles and Indicators organizations can use to report their economic, environmental, and social performance. GRI is committed to continuously improving and increasing the use of the Guidelines, which are freely available to the public.