GLOBAL - Leading institutional investors have written to participants of the UN Global Compact, assessing the adoption of environmental, social and governance (ESG) issues in corporate performance.
In the letter, companies which had good disclosure of progress were praised, while the worst performing were criticised and asked to improve. Disclosure of progress, as measured through the Communication on Progress report, is viewed as a key way for stakeholders to hold companies to account.
The investors, representing US$12.3trn in funds, are all signatories of the UN Principles for Responsible Investment (PRI), which calls for the adoption of ethical investment practices. The letter underlined the belief of the signatories that an engagement with ESG issues can be beneficial to corporate performance.
Steve Waygood, head of engagement at Morley, one of the investors, said: "We want to help to protect the credibility of the Global Compact, which suffers when companies free-ride on the good work of others. Without adequate reporting on progress, a company signing the Global Compact's ten principles represents little more than a statement of good intentions."
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