Exchanges challenged on sustainability disclosure

bullseye_dartboard_410Stock markets could and should play a crucial role in helping to create more sustainable global capital markets, according to leading institutional investors. A group of 24 investors responsible for assets totalling $1.6 trillion has sent a letter to 30 leading stock exchanges calling on them to consider how they can improve sustainability reporting by companies. The letter, which was signed by mainstream asset management companies and pension funds as well as specialist ethical investors, is part of the Principles for Responsible Investment (PRI) initiative launched in 2008 and backed by the UN. As well as calling for better reporting of environmental, social and governance criteria (ESG) by listed companies, the letter ranks exchanges in a sustainability league table according to the current level ESG disclosure. Bottom of the table are Nasdaq, the Australian Stock Exchange, Korea Exchange, Santiago Stock Exchange and Philippine Stock Exchange. At the top sit Euronext Paris, Amsterdam and Lisbon, Tokyo Stock Exchange and Borsa Italiana. Non-disclosure of ESG data is problematic because it makes it difficult for long-term investors to assess the wider ESG risks and opportunities associated with a company, according to Paul Abberley, CEO of Aviva Investors, which is one of the signatories. “Markets are driven by information,” he says. However, the simple provision of data will not solve the problem. To be useful, data need to be standardised and comparable. “Good quality ESG reporting among large companies is not uncommon, but the information being reported lacks comparability and usefulness,” says James Zhan, director of UNCTAD’s division on investment and enterprise. “This investor initiative demonstrates the strong market demand for standardised ESG reporting and greater attention to sustainable development.” The group of investors and its backers at the UN believe it is now up to stock exchanges to meet this market demand both nationally and globally. “Stock exchanges can play and important role in mainstreaming best practices nationally and contributing to international efforts to harmonise ESG disclosure,” says Zhan. The signatories of the letter included major European pension funds, such as Fonds de réserve pour les retraites and AP7. The mainstream asset management signatories included Allianz Global Investors, Aviva Investors, Dexia Asset Management and Sparinvest. Four service providers also signed the letter. Fiona Rintoul, editorial director ©2011 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.