$199bn investor coalition pushes emerging markets sustainability disclosure

Study shows South Africa leading and China lagging on transparency.

An international coalition with the backing of $199bn in assets from investment managers, institutional asset owners and NGOs has formed to push for improved disclosure in emerging market countries. The group, launched by the Social Investment Research Analyst Network (SIRAN), a working group of the US Social Investment Forum, is supported by the Global Reporting Initiative (GRI), Ceres, the environmental investor group, and the Association for Sustainable and Responsible Investment in Asia (ASrIA).
An investor sign-on statement is being sent out to emerging market companies urging them to improve their sustainability disclosure. A related study issued by SIRAN indicates that almost nine out of ten firms (87%) do now offer at least some sustainability disclosure. The research, conducted by KLD Research & Analytics, said South Africa emerged as overall leader in sustainability reporting with six companies meeting all five criteria, accounting for 75% of the country sample. China was the laggard on sustainability reporting with three companies meeting none of the five criteria, and only 25% of Chinese companies surveyed meeting all criteria. The study examined sustainability reporting in 75 emerging market companies, focusing on seven countries: Brazil, China, India, Russia, South Africa, South Korea and Taiwan, with a specific focus on three industries: energy, metals and mining andtelecommunications. KLD examined disclosure in five areas: transparency on sustainability issues, a dedicated sustainability area within the website or annual report, existence of a stand-alone sustainability report, reference to the GRI framework for the sustainability report, and the existence of sustainability goals and benchmarks.
Paul Hilton, SIRAN representative and director of advanced equities research at Calvert, the US SRI mutual fund group, said: “We are encouraged that companies in emerging markets are getting the message: analysts need information about environmental, social, and governance performance in order to identify the best companies in which to invest. Companies that are transparent will be rewarded by the market.” Noel Friedman, managing director of research products at KLD, said: “Although the results are encouraging, it is important to emphasize that a company can produce a high quality sustainability report and still fail to achieve sustainability in the areas relevant to its sector, such as climate change for utilities or human rights and the environment for mining companies. At the same time, a sustainability report provides an important tool for stakeholders to communicate with companies about a range of issues, and allows companies to publicly establish goals and benchmarks for improvement.”
The full report can be found at: www.siran.org/emd