A coalition of international investors representing $2.1 trillion in assets is upping its scrutiny of ‘laggard’ listed companies with a view to improving their reporting of ESG issues.
The 86 companies have been targetted for their failure to honour the reporting requirements of the UN Global Compact, the world’s largest voluntary corporate responsibility initiative.
“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,” said executive director of PRI James Gifford.
“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.”
In 2008, investor engagement resulted in 33 per cent of laggard companies subsequently submitting their reports, while in 2009 that increased to nearly half, including positive responses from firms such as BHP Billiton, Severn Trent and The Gap, PRI said.
At the beginning of February the Global Compact Office announced that 859 companies were removed (delisted) from the initiative’s database of participants between 1 October 2009 and 1 January 2010. The total number of businesses removed for failure to meet the Global Compact’s mandatory annual reporting requirement now stands at 1840.
The investors in the coalition are all signatories to the UN‐backed Principles for Responsible Investment Initiative (www.unpri.org), and include funds such as Universities Superannuation Scheme, the Swedish Ethical Council (AP1; AP2; AP3; AP4) and Nordea Investment Funds. Principle 3 of the PRI asks investors to seek better and more systematic disclosure from the entities in which they invest.