Open letter regarding corporate sustainability reporting

21 Jun 2012

Sir,

As heads of state gather for the Rio+20 meeting it is important to focus on practical and meaningful action that will benefit us all.

Investors have a vital role to play in ensuring a sustainable future for our world. But how can we make informed investment choices if basic information on sustainability is lacking?

That’s why we’ve formed a group to call for a significant change in corporate reporting which we believe will have a positive impact on the sustainability of the planet and ensure the quality of life for our children and future generations.

At the moment 75% of companies* do not report on sustainability issues, limiting the ability of markets to integrate sustainability into company valuation.

We are asking participants at Rio+20 to commit to developing a UN agreement on sustainability reporting so that we, as investors, can help guide the world towards a sustainable future.

This UN agreement would be a commitment by member states to develop regulations, codes or listing rules to encourage the integration of sustainability issues within the annual reports of all listed and large private companies, and would be a step towards integrated reporting.

Corporate sustainability disclosure would be on a “report or explain” basis. We recognise the need for flexibility so an opt-out for companies that choose not to prepare a sustainability report could exist. However, these companies would be required to explain their reasons to their stakeholders.

Without this agreement it could be years before sustainability reporting is common practice across global markets. An international convention would level the playing field and engage more companies on the path to business sustainability.

The scale of support among investors for this idea is extraordinary. Managers representing US$2 trillion of people’s savings have come together to ask for this convention. They are backed by investor groups representing more than US$50 trillion of assets.

We believe that disclosure is in all companies’ interests. Reporting is one of the most important catalysts for changes that contribute to the long-term health of a business. The world now needs to move from the pioneering approach of a minority of companies to a global benchmark of best practice for all companies.

We call on governments internationally to support our proposals which, if adopted, could be one of the most significant and practical outcomes of the Rio+20 Summit.

Yours sincerely,

Signature of John McFarlane, executive deputy chairman
 
John McFarlane, executive deputy chairman, Aviva

Coalition signatories:

Lead coalition signatory: Paul Abberley, chief executive, Aviva Investors

Dr Melsa Ararat, Director, ILLAC Ltd

Jyoti Banerjee, Partner, Fronesys

Tim Bolton Carter, Regional Director, Rathbone Brothers plc

Helen Brand, Chief Executive, ACCA (the Association of Chartered Certified Accountants)

Kris Douma, Head of Responsible Investment & Governance, MN (Netherlands)

Steven A Falci – Head of Strategy Development - Sustainable Investment, Kleinwort Benson Investors

Julie Fox Gorte, PhD, Senior Vice President for Sustainable Investing , PaxWorld Management LLC

Jeremy Goodman, CEO, CA Cheuvreux

Toby A A Heaps, CEO, Corporate Knights Inc

Patrick d'Humieres, CEP of Institut Rse management - ecovalue

Adam Kanzer, Managing Director & General Counsel, Domini Social Investments LLC

Mariko Kawaguchi, Chief Executive & Secretary General of SIF Japan

Steve Kelly, Managing Director, Extel

Mervyn King, Chairman, International Integrated Reporting Council (IIRC)

Jonas Kron, Vice President, Trillium Asset Management, LLC

Barbara Krumsiek and Richard Burrett, Co-Chairs of UNEP Finance Initiative

Ernst Ligteringen, Chief Executive, Global Reporting Initiative (GRI)

Peter Madden, chief executive, Forum for the Future

Professor Michael Mainelli, Executive Chairman, Z/Yen Group

Mark Makepeace, Chief Executive, FTSE Group

Jacob Nordby Christensen, RI Director, Sparinvest Holdings SE

Saker Nusseibeh, CEO of Hermes Fund Managers

Melih Önder, Chairman, Logos Portföy Yönetimi AŞ (Logos Asset Management)

Howard Pearce, Head of Pension Fund Management, Environment Agency Active Pension Fund

David Pitt-Watson - Chair, Investment Commission, UNEPFI

Michael Quicke, Chief Executive, CCLA Investment Management Ltd

Andrew Raingold, Executive Director, Aldersgate Group

Paul Scott, managing director, CorporateRegister.com

Paul Simpson, Chief Executive Officer of the Carbon Disclosure Project

Anders Thorendal, treasurer and chief investment officer, Church of Sweden

Peter Veldman, COO, Cyrte investments

Peter Webster, Executive Director, EIRIS Global Research

* Bloomberg research into 20,000 companies