Coalition of Institutional Investors Urges UN Declaration Requiring Sustainability Breakdowns in Annual Reports

(September 20, 2011) — A group of investors led by Aviva Investors has urged United Nations member states to produce sustainability breakdowns in annual reports.

Aviva plc, Aviva Investors’ parent company, was the first financial services firm to put its sustainability report within the Annual Report and Accounts to an advisory shareholder vote, the firm stated. Paul Abberley, Chief Executive of London-based Aviva Investors, will announce the ‘call to action’ at today’s United Nations Private Sector Forum on Sustainable Energy for All, held in conjunction with the 66th Session of the UN General Assembly. “Progressive companies around the world have come to understand that long term-value is enhanced by embedding long-term sustainability into their business strategy and by fully disclosing their progress to investors,” Abberley stated. “As a long-term investor we also recognize the positive impact that embedding long-term sustainability into a business strategy can have on shareholder value…We believe that all corporate boards should be required to consider the future sustainability of the firm they govern. This should not only enhance long-term profitability and returns to investors, but also improve the quality of stock markets, increase macro financial stability and make a material contribution to the lives of those impacted by corporate activity. This is why we are calling on the United Nations member states to commit to develop policy on Corporate Sustainability Reporting. Markets are driven by information. If the information they receive is short term and thin then these characteristics will define our markets.”

According to Aviva, an international policy framework should be developed promoting transparency and accountability. As outlined in a statement released by the firm, the coalition asserted that the international policy framework should adhere to two main principles:

1. Transparency – UN member states should develop national regulations which mandate the integration of material sustainability issues in the Annual Report & Accounts.

2. Accountability – UN member states should provide effective mechanisms for investors to hold companies to account on the quality of their disclosures.

The coalition represents financial institutions, professional bodies, NGOs and investors with $1.6 trillion in assets under management.

Institutional investors have become increasingly vigilant about monitoring environmental risks. Earlier this month, for example, GovernanceMetrics International launched a new product to provide investors and corporate stakeholders with an evaluation of public company Environmental, Social and Governance (ESG) risks. The platform, called GMI Analyst and available through subscription, will produce an ESG Rating — measuring long-term sustainable performance — as well as a Risk Rating, identifying companies facing risks over one to two years of litigation and regulatory actions and other negative events that can harm a company’s market valuation.