22/02/2011
By Ilonka Oudenampsen
Twenty-four institutional investors led by Aviva Investors have written to 30 of the world’s largest stock exchanges asking that they address inadequate sustainability reporting by companies.
The investors, representing $1.6 trillion, aim to encourage stock exchanges to consider how to improve the quality of sustainability reporting by the companies that are listed on their exchange. Developed using Bloomberg data, the letter also ranks individual listing authorities on a sustainability league table that assesses the current level of environmental social and governance (ESG) disclosure among listed companies.
Exchanges where a large number of companies are disclosing ESG data include the Euronext Paris, Tokyo Stock Exchange, Helsinki, Euronext Amsterdam, Euronext Lisbon and Borsa Italiana. Exchanges with the least number of companies disclosing this data include the Australian Stock Exchange, NASDAQ GS, Korea Exchange, Santiago Stock Exchange and Philippine Stock Exchange.
A suggestion particularly advocated by Aviva Investors is a listing requirement for companies to consider how responsible and sustainable their business model is, and put a forward-looking sustainability strategy to the vote at their AGM.
Paul Abberley, CEO of Aviva Investors London, said: “Markets are driven by information. A lack of information as a result of limited or non-disclosure of ESG data makes it difficult for long-term investors such as us to assess the wider ESG risks and opportunities associated with a company. We believe that stock exchanges can play a crucial role in helping to create more sustainable global capital markets because of their ability to directly influence and monitor the operations and strategy of companies seeking to access the equity markets. This can only be a good thing for investors.”
The letter is part of a broader collaborative engagement initiative that was launched by Aviva Investors and facilitated by the UN-backed Principles for Responsible Investment (PRI) in 2008.
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