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LONDON, 15 March 2012 – A coalition of global investors from 12 countries managing over US$3 trillion of assets, including Aviva, Amundi Asset Management and New Zealand Superannuation Fund, today added its voice to increasing calls for better corporate reporting on environmental, social and corporate governance (ESG) activities.
The coalition of investors, all signatories to the UN-backed Principles for Responsible Investment, is writing to 118 UN Global Compact (UNGC) companies, with a combined market cap of an estimated US$2.59 trillion, to either:
- welcome advanced-level reporting, or, conversely,
- challenge non-communicating companies to regain full participant status.
This is the fifth year that investors have engaged with UNGC participant companies on the issue of transparency. Each of the 29 laggard companies, with a combined market cap of an estimated US$136.9 billion, are members of the UNGC, but have failed to produce the mandatory annual report that communicates their progress on corporate sustainability. The UNGC recently announced that it has expelled 3,123 companies since 2005 for failure to communicate progress on their efforts to implement its ten sustainability principles.
From 2008 through 2011, the engagement resulted in an average 40.1 percent of laggard companies subsequently submitting their sustainability reports; this has included firms such as BHP Billiton, Aker Solutions, Severn Trent, Merck Kga, Oriflame Cosmetics, The Gap and LVMH.
In addition to writing to laggard companies, the investor coalition has acknowledged 89 leader companies with a combined market cap of an estimated US$2.45 trillion who have been identified as advanced-level reporters. These leaders include Novo Nordisk, Enel, Daimler, Nestle, Telefonica and Siemens.
Steve Waygood, Head of Sustainability, Research and Engagement at Aviva Investors, one of the investors involved in the coalition, said:
“Aviva Investors is proud to work in collaboration with other like-minded institutional investors, all of whom understand that good management of corporate performance on ESG issues can be material to corporate earnings. Since we first proposed this initiative over five years ago it has gone from strength to strength, successfully encouraging some 40.1% of companies over the past five years to make good on their reporting commitments to the UN Global Compact. This bodes well for the discussions at the forthcoming UN Rio+20 conference in June, where corporate reporting on sustainability performance is appropriately high on the agenda of the 193 Member States that will be assembled.”
James Gifford, Executive Director of the PRI added,
“As a result of the global financial crisis, investors increasingly recognise that improved corporate disclosure of ESG issues leads to better risk management, good governance and enhanced transparency, all of which are necessary to protect long-term returns. Companies need to understand this if they want to attract capital.”
Gavin Power, Deputy Director of the UN Global Compact added,
“Corporate sustainability implementation and disclosure both lie at the heart of the UN Global Compact. We therefore continue to applaud this initiative by global investors, now in its fifth year. At the upcoming Rio+20 Summit, there will be an opportunity for governments and public policy makers to fully take stock of the rapidly evolving trends in business sustainability and responsible investment — with an eye towards creating new incentives to drive higher levels of sustainability performance and disclosure. We encourage investors to actively participate in the Rio+20 process, and welcome their contributions”.
The PRI and UNGC initiatives are engaged in a number of mutually reinforcing activities, including an investor engagement urging companies around the world to sign onto the UN Global Compact. As of November 2011, this engagement saw 211 of the targeted companies join the UNGC.
A number of the investors participating in this engagement are listed below:
- Amundi Asset Management
- First Swedish National Pension Fund (AP1)
- Second Swedish National Pension Fund (AP2)
- Third Swedish National Pension Fund (AP3)
- ASN Bank
- Aviva Investors
- Boston Common Asset Management
- Canada Pension Plan Investment Board
- Cyrte Investments . Dexia Asset Management
- Folketrygdfondet (Government Pension Fund Norway)
- Mn Services N.V.
- New Zealand Superannuation Fund
- Newton Investment Management
- Northern Ireland Local Government Officers’ Superannuation Committee
- OPSEU Pension Trust (OPTrust)
- Pensions Caixa 30 FP
- PGGM Investments
- Santa Fé Portfolios Ltda
- SNS Asset Management
- Syntrus Achmea Asset Management
- The Central Church Fund of Finland
- The Church of England National Investing Bodies
- Trillium Asset Management
- Wespath Investment Management
About the Principles for Responsible Investment (PRI)
The Principles for Responsible Investment, convened by UNEP FI and the UN Global Compact, was established as a framework to help investors achieve better long-term investment returns and sustainable markets through better analysis of environmental, social and governance issues in the investment process and the exercising of responsible ownership practices. The Principles themselves, a full list of signatories and more information can be found at www.unpri.org
About the United Nations Environment Programme Finance Initiative (UNEP FI)
UNEP FI is a unique public-private partnership between UNEP and the global financial sector. UNEP works with over 170 banks, insurers and investment firms, and a range of partner organisations, to develop and promote linkages between sustainability and financial performance. Through its comprehensive work programme encompassing research, training, events and regional activities, UNEP FI carries out its mission to identify, promote and realise the adoption of best environmental and sustainability practice at all levels of financial institution operations. More information: www.unepfi.org
About the United Nations Global Compact
Launched in 2000, the UN Global Compact brings business together with UN agencies, labour, civil society and governments to advance ten universal principles in the areas of human rights, labour, environment and anticorruption. Through the power of collective action, the Global Compact seeks to mainstream these ten principles in business activities around the world and to catalyze actions in support of broader UN goals. With more than 5300 participating businesses from over 135 countries, it is the world’s largest voluntary corporate sustainability initiative. More at: www.unglobalcompact.org