SRI investors await 'game changing' EU reform

SRIProponents of socially responsible investment (SRI) have hailed proposals from the European Council to encourage EU public interest companies with more than 500 staff to report on their social and environmental performance. The proposals, which were passed by the council this week, will now go to the European Parliament for a final vote to complete the legislation, expected in March. "These proposals are a game-changer for corporate transparency in Europe,” says Steve Waygood, chief responsible investment officer at Aviva Investors. “Making available non-financial measures of performance in these areas will be a positive outcome for investors, the wider capital markets and civil society. From our investor perspective, they have welcome potential to help investors make more accurate valuation assessments.” The proposed rules will operate on a “comply or explain” basis, meaning companies may choose not to report their social and environmental performance if they explain their reasons. Some have criticised European politicians for “watering down” the original rules, for instance by raising the company size threshold from 250 to 500 staff. Environmental group Friends of the Earth has criticised the proposals for failing to include private companies within its remit. However, SRI fund managers say the proposals could nevertheless give a significant boost to the amount of social and environmental information available to investors. ©2014 funds europe

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