$2trn investor coalition calls for mandatory corporate sustainability reporting

A coalition of institutional investors, non-governmental organisations, church groups and others with combined assets under management of $2trn (€1.57tn) have stepped up their call for big companies to be forced to report on environmental, social and governance (ESG) issues.
The grouping now includes more than 70 members, including the United Nations Principles for Responsible Investment, the Global Reporting Initiative, the Association of Chartered Certified Accountants (ACCA), environmental campaign group the WWF and the UN Conference on Trade and Development (UNCTAD).

They have called on governments at the forthcoming Rio+20 summit to make it mandatory for large listed and unlisted firms to integrate ESG into their annual reports, on a ‘report or explain basis’.
The move would be a “realistic, tangible and meaningful” outcome of the summit, which takes place in Rio de Janeiro in Brazil next month, said the group – which is being coordinated by UK fund management firm Aviva Investors.

“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 arealistic, tangible and meaningful success from Rio+20,” said Aviva Investors’ Interim CEO Paul Abberley in a letter sent to ministers worldwide, from Afghanistan to Vietnam. He is also representative for the Corporate Sustainability Reporting Coalition (CSRC).
He went on: “If investors continue to receive information that is short-term and thin, then these same characteristics will continue to define our markets.”

He said the “simple step” would create the right kind of discussions within boardrooms, throughout firms and encourage investors to think about sustainability.

UN PRI says governments should take steps

He noted that 75% of companies do not currently report on sustainability issues at all – and that at current rates it will be “decades” before sustainability reporting is common practice globally.

“The PRI 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,” said Wolfgang Engshuber, Chair of the Advisory Council of the 1,054-signatory PRI.