Corporate Eye

Sustainable Stock Exchanges Break Cover

Aviva InvestorsThe other day I was watching The Simpsons … I blame it on the kids, but thankfully they don’t always understand the bits I chuckle at.

Anyhow, the episode in question was “My Fair Laddy”, a wonderful rip of My Fair Lady complete with parodies which you feel ought to be violating copyright somewhere along the line.

For example, the elocution lesson: “The Snot .. From My Nose .. Shouldn’t Fall .. Upon My Clothes”.  I know it’s a long way from Spain, but lets not get into a debate on elongated vowels here!

Now, a few weeks ago I read something (I forget what) about Aviva Investors agitating strongly for increased responsibility within companies.  I think I reread it several times, just to make sure I’d understood correctly, looked genuinely surprised and made a mental note to look out for Aviva in the future.

Lo and behold, up they pop again, pressing for stockmarkets to include ESG criteria in their listing rules.  Did you just reread that sentence? I know I reread the article several times, remembered to close my mouth and thought “well this I gotta see!”

Sustainable Stock Exchanges

It all started back in November last year when a flight of top investment and market executives met at the United Nations Headquarters at an event hosted by Principles for Responsible Investment (PRI), the UN Global Compact and the UN Conference on Trade and Development (UNCTAD).

The discussions which took place seem to have been truly ground breaking.  A report of the event on PRI’s website says that a number of its members “spoke openly about the ways in which investors and exchanges could work together” (emphasis added).

The meeting was headlined “Sustainable Stock Exchanges”, and the participants were so enthused by their discussions that they determined to make this an annual event.  So earlier in September, on the closing day of UNCTAD’s World Investment Forum in China, we had Sustainable Stock Exchanges 2010 from which the current crop of coverage springs.

A key part of the meeting was the launch of Aviva Investors’ report “Real Obstacles, Real Opportunities”.  Based on a survey of 30 of the world’s leading exchanges it had the following key findings:

  • 92% of the exchanges who replied have sustainability based indices
  • 37% have guidelines on ESG reporting in place
  • 31% support mandatory ESG reporting in the future
  • 19% have mandatory ESG reporting in place
  • 94% are considering future sustainability issues.

These figures need to be taken with a slight statistical pinch of salt simply because the sample size is so small and, like any survey, the respondents are self-selecting.  However, the figures do give a good overall impression that ESG reporting is viewed far more favourably by listing authorities that may otherwise have been expected.

So what happens now?

The answer lies once again with Aviva Investors.  They are going to write to the CEOs of the global listing authorities and stock exchanges, according to the UN Global Compact, “to demand that sustainability reporting becomes embedded within listing rules and that listed companies put a forward looking sustainability strategy to vote at their AGM.” (my emphasis)

This is the “call to action” which the Sustainable Stock Exchanges 2010 meeting ended with — a demand that stock exchanges impose sustainability criteria upon their members.  And is Aviva Investors following the herd here?

No. The most astonishing part of the whole tale is that Aviva Investors, in the context of world-bestriding institutional investors, is here “by itself”.

Other signatories to the “call for action” are well known international sustainable investment management institutions, such as the Co-operative Bank, Triodos Bank, Northwest Ethical Investments and Fonds de Réserve pour les Retraites (FRR).  However, even when combined they can’t equal the value of the assets under the control of Aviva Investors.

So in short, Aviva Investors have broken with the herd and joined the camp of those darned sandal-wearing hippies who seem to think there should be more to investment than simple ROI.  Which leaves me no other option but to say, in true Rex Harrison style, “By George, I think they’ve Got It!”

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A former CTO, Chris has a broad and varied background. He’s been involved with blue chips, consultancies & SMEs across a wide variety of sectors and has worked in Europe, the Middle East and Australia. In 2007 he decided to combine his knowledge of business and IT with his passion for all things sustainable and has been busy writing ever since. However, his greatest ambition remains to brew the perfect cup of coffee.
 
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