Aviva Investors today announced that a coalition of responsible investors will be writing to CEOs of global listing authorities and stock exchanges to demand that sustainability reporting becomes embedded within listing rules.
- Stock exchanges challenged to promote disclosure of data on sustainability performance and strategy
- Investors representing AUM globally of US$558 billion already in support
- Survey of top 30 exchanges suggests that the majority do not provide sustainability reporting guidance for listing companies.
Aviva Investors today announced that a coalition of responsible investors will be writing to CEOs of global listing authorities and stock exchanges to demand that sustainability reporting becomes embedded within listing rules.
The "call to action" is part of a broader engagement initiative that was launched by Aviva Investors and facilitated by the UN-backed Principles for Responsible Investment (PRI) last year. It already has the support of investors representing combined assets under management of US$558 billion, and the company plans to enlist significantly more supporters globally over the coming weeks.*
The aim of the collaborative engagement initiative and the latest "call to action" is to promote a global listing environment that requires companies to consider how responsible and sustainable their business model is, and also encourages them to put a forward looking sustainability strategy to the vote at their AGM.**
Paul Abberley, CEO of Aviva Investors London, said: “As long term investors we believe that embedding environmental, social and governance factors into a company’s strategy can enhance shareholder value.
“We also 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. We are sending a strong signal that, all things being equal, Aviva Investors would prefer to trade on stock exchanges that maintained this listing provision.”
Aviva Investors says, aside from a few notable examples such as the Singapore, Johannesburg and Istanbul Exchanges, it has yet to see a serious commitment from stock exchanges to make changes to their listing rules. A study commissioned by Aviva Investors on the sustainability practices of the world’s leading 30 exchanges by market capitalization ***, called “Sustainable Stock Exchanges – Real Obstacles, Real Opportunities”, has found that currently a majority (57%) of exchanges do not provide sustainability reporting guidance for listing companies.
It also found that although 70% of those surveyed agreed that exchanges do have a responsibility to encourage greater corporate responsibility on sustainability issues and nearly all are considering new initiatives in this area, only 25% would consider altering listing rules to oblige companies to assess how responsible and sustainable their business model is. Just over 10% would consider suggesting that companies put this to the vote.
The topic was also the focus of a special event at the UNCTAD World Investment Forum last Wednesday in Xiamen, China, where international dignitaries, along with representatives from a number of the world’s stock exchanges and their regulators, met to discuss investing in sustainable development. Based on Aviva Investors’ study, the event examined how stock exchanges can overcome the obstacles they face in requiring companies to develop long-term sustainability practices (including demutualization, competition, conflicting interests and investors’ ‘short-termism’) and highlight opportunities in the promotion of sustainability practices among listed companies.
“Environmental, social and governance issues are critical for creating a world economy that is more stable, inclusive and sustainable“, said Supachai Panitchpakdi, secretary-general of UNCTAD. “Stock exchanges and regulators have an important role to play: promoting standardized, transparent ESG disclosure, and empowering investors through corporate governance rules to make use of that information.”
James Gifford, executive director of the PRI added: "Disclosing ESG performance data in a systematic way gives investors additional confidence that a company is effectively managing its risks and opportunities. The Sustainable Stock Exchanges initiative, which is led and supported by investors, points to a clear business case for global stock exchanges to play a role in promoting transparent and sustainable financial markets."
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For more information contact:
Aviva Investors
Angela Warburton
Aviva Investors Corporate Affairs
Telephone: +44 (0)20 7809 8618
E-mail: angela.warburton@avivainvestors.com
UNCTAD
Catherine Sibut-Pinote
Communications and Information Unit
UNCTAD
Telephone: + 41 22 917 55 49/58 28
Mobile + 41 79 502 43 11
E-mail: catherine.sibut@unctad.org
www.unctad.org
For information on the UNCTAD Investment Forum, please visit www.unctad-worldinvestmentforum.org/
PRI
Elliot Frankal
Head of Communications
Principles for Responsible Investment
Telephone: +44 207 749 5107
E-mail: Elliot.Frankal@unpri.org
Notes to editors:
* The members of the "call to action" to date include Aviva Investors, Fonds de réserve pour les retraites – FRR, SNS Asset Management, SNS Asset Management, Triodos Investment Management, Mn Services NV, The Co-operative Asset Management, and Northwest & Ethical Investments. The "call to action" is also supported by Ceres.
** The main purpose of the proposed corporate responsibility reporting requirement - and the associated AGM vote - is to create the right kind of discussions within the boardrooms of listed companies around the world, and then between the company and its shareholders. The proposal suggests the UN Global Compact as an appropriate framework for boards to consider, and that reporting be conducted on a “comply or explain” basis. The three key components to the mechanics of the AGM vote itself are:
(i) the report would be published in its entirety or summarised in the Report and Accounts;
(ii) the vote would be advisory;
(iii) shareholders will be asked to approve the report.
*** A 10-question survey was sent to the world’s 30 leading stock exchanges in August 2010 to better understand the ESG-related requirements and initiatives they practice with regard to listed companies. It questioned the exchanges’ sustainable investment initiatives, existing policy environments, regulatory functions, listing and disclosure requirements, and other regulatory or policy initiatives. The survey also took into account publicly available information. A copy of the report can be downloaded from www.responsibleresearch.com
About Aviva Investors
Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 16 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management in excess of £248 billion at 30 June 2010.
About Aviva plc
- Aviva is the world’s sixth largest1 insurance group, serving 53 million customers across Europe, North America and Asia Pacific
- Aviva’s principal business activities are long-term savings, fund management and general insurance, with worldwide total sales2 of £45.1 billion and funds under management of £379 billion at 31 December 2009
1 Based on gross worldwide premiums at 31 December 2009
2 Based on 2009 published life and pensions PVNBP on an MCEV basis, total investment sales and general insurance and health net written premiums, including share of associates’ premiums