GLOBAL - An influential coalition of investors, including 33 pension funds, has demanded 86 major companies produce overdue sustainability reports.
The resolution is the third to be tabled this year after oil giants BP and Shell came under fire over plans to invest billions in environmentally damaging oil sands projects (Global Pensions; January 18, 2010).
The dispute relates to the United Nations Global Compact, a set of 10 principles on human rights, labour standards, the environment and anti-corruption that about 700 publicly-listed companies signed up to.
As part of the deal, the firms agreed to report on how they put the initiative's principles into action.
However, about 10% of public-listed signatories have failed to produce their annual sustainability report.
Aviva Investors head of sustainability, research and engagement Steve Waygood said companies' who ignored environmental, social and governance issues were failing their investors.
He explained: "Almost 50% of companies responded positively to this investor coalition last year and I expect responses to be even higher in 2010.
"ESG issues are now a vital part of corporate reporting. A company's ability to manage and mitigate exposure to ESG issues is an important factor for many mainstream investors, and if companies do not report then investors cannot make sound investment decisions."
This is the third year that investors have raised the issue of transparency. In 2008, 33% of "laggard" companies submitted reports under pressure from the coalition, while 47.6% of listed firms responded positively in 2009.
Principles for Responsible Investment executive director James Gifford said: "Companies that want to attract capital now recognise that reporting of issues such as carbon emissions and corporate governance is becoming as important as the reporting of traditional financial issues.
"In the wake of the financial crisis, many investors believe that analysis of ESG issues is part of a more holistic approach to assessing a company and managing risk."
The investor coalition also praised 44 companies for producing high quality sustainability reports deemed "useful" for investors.
Standard Life has increased exposure to risk assets in three out of five funds in its Active Plus and Passive Plus workplace pension ranges.
Some 48% of employers are unaware of the services or help they offer to members of their defined contribution (DC) schemes, according to Aon.
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