Aviva convenes Corporate Sustainability Reporting Coalition

20 Sep 2011

Call to action

Aviva has convened a Corporate Sustainability Reporting Coalition (CSRC) calling on United Nations (UN) member states to commit to develop a policy framework on corporate sustainability reporting.

The Rio +20 Earth Summit on sustainable development has its 20th anniversary in June 2012. We believe the time has come to invite heads of state and heads of government to take action.

We are proposing PDF (575KB) that UN member states at Rio +20 commit to develop national regulations mandating the integration of material sustainability issues in companies’ Annual Report & Accounts. We are also advocating effective mechanisms for investors to hold companies to account on the quality of their disclosures – eg through an advisory vote at the AGM.

At Aviva, we believe there is only one way to deliver prosperity and peace of mind for our customers: responsibly, sustainably and with integrity. We believe that positive and sustainable commercial outcomes only come from a properly joined–up understanding of our commitments to our people, our customers, our environment and the communities in which we work. We believe a well-managed, responsible business will perform better and create more sustainable value over the long term.

The production of a report and accounts that integrates sustainability throughout will help create the right kind of discussions within boardrooms, throughout firms and encourage investors to think about the sustainability of the firm. We believe this will help capital to be allocated to more sustainable, responsible companies and strengthen the long term sustainability of the financial system.

Sustainable stock exchanges

This call to action is a direct evolution of a broader collaborative engagement initiative which was launched by Aviva Investors and facilitated by the UN-backed Principles for Responsible Investment (PRI) in 2008.

The Sustainable Stock Exchanges initiative has been urging all stock market listing authorities to make it a listing requirement that companies consider how responsible and sustainable their business model is. It subsequently requests companies put a forward-looking sustainability strategy to the vote at their AGM.

There has been progress made by only a few notable stock exchanges such as those in South Africa, Singapore and Malaysia. Elsewhere, there has yet to be a serious commitment to sustainability by, for example, integrating it into the guidance that they issue to companies or their listing rules. Aviva Investors research1 has found that a majority (57%) of exchanges do not provide sustainability reporting guidance for listing companies.

It is our belief from feedback we’ve received that stock markets require the support from governments and regulators before they will take the steps we’re asking for. This is why we believe this is a relevant issue for the global forum of the Earth Summit.

Global framework on corporate sustainability reporting

We believe that an international policy framework should adhere to four key principles:

  1. Transparency - companies should be required to integrate material sustainability issues within their report and accounts – or to explain to the market why they cannot do this.
  2. Accountability - this report or the explanation should be put to an investor vote. This should encourage investors to read the information, form an opinion, and provide feedback to the company.
  3. Responsibility - board duties should explicitly include setting the company’s values and standards and ensuring that its obligations to its shareholders and other stakeholders are understood and met.
  4. Incentives - companies should state in remuneration reports whether the remuneration committee consider ESG factors which are of material relevance to the sustainability and long term interests of the company when setting remuneration of executive directors; aligning remuneration with the interests of shareholders and other key stakeholders, including customers and employees.

1 “Sustainable Stock Exchanges – Real Obstacles, Real Opportunities”, (2010)