Steve Waygood: Larger companies must do better on sustainability disclosure

“We need a clear, long term plan – and clear long term data to deliver it”

There’s no two ways about it: the Brexit vote represented an earthquake in British politics.
And we’re all wondering what the short term future holds for us and when the UK will start the process of withdrawing from the EU.
In business and the financial markets we’re likely to see short term volatility in a reaction to all the uncertainty. Markets hate uncertainty – so we need a clear plan of the way forward from the Government as soon as possible.
But that does not in any way whatsoever mean we should take our eyes off the ball on setting out a long term, sustainable vision for business – and deliver it. If we don’t those who follow us will not thank us for the inheritance we leave them.
For Aviva Investors, that means the investments we make must last lifetimes as well. Being sustainable and creating long-term value is bred in our collective bones. It is at the heart of how we do business.
That takes in tackling climate change – so delivering the commitments made in the Paris Climate Change Treaty is of paramount importance.
Businesses like ours must also continue to up their game in the investments we make in the transition to a low carbon economy as well as using our investment holdings as a lever for change, especially by challenging fossil fuel companies to look longer term – and to the low carbon economy.
But being sustainable is about more than just climate change, critical though it is. It’s also tackling the big issues we face – like those set out in the UN Global Goals on Sustainable Development to end poverty, fight inequality and injustice, and tackle climate change
Creating a sustainable future is the shared responsibility of governments, regulators, NGOs and business – but inevitably it will be business that delivers it.
And anyone in business worth their salt will know how important it is to have targets and objectives – and to be judged against them. They act as a powerful incentive – especially when we use them to compare how we’re doing against our competitors.
The same is true in any job. We will have our own goals which are used to assess how we are doing. High quality information is essential for assessing how we’re doing – and where we want to aim for.Markets are also driven by the quality of the information available to them.
So to make the right decisions markets must have access to transparent, high quality data on sustainability.
For the past five years the Aviva Group has partnered with Corporate Knights to publish annual data ranking the world’s stock exchanges on disclosing the data on sustainability that is so important to us.
We’ve seen progress – but clearly still have a long way to travel. Over the five years large companies have been slow in disclosing the volume of the green house gases they emit – with only a quarter of disclosure by energy, waste and water companies with only around a quarter disclosing this vital metric.
The disclosure of what we call social metrics is also unsatisfactory. For instance, the rate of injuries amongst employees for many sectors was only in the range of only 10 to 30%, with similar low rates for employee turnover.
These aren’t just numbers on a page. Nor is this just another techy data set. They are figures that tell us a huge amount about whether companies are behaving like good corporate citizens – and they can be a powerful tool to catalyse change and make a contribution to rebuilding trust in the way in which business can and should contribute to society.
My hope is that we can get a set of internationally agreed and consistent indicators, which make demands on listed companies to provide this information, but with the flexibility they need not to see this as another bureaucratic burden. If they are not provided, they need to explain why.
Investors want high quality information about the businesses they invest in so they can be confident of getting a good return. Rules like those we advocate in the 2016 edition of the report will create a long-term return, not just for investors, but for society as a whole.

Steve Waygood is Chief Responsible Investment Officer at Aviva Investors.