A study of emerging market companies indicates that 87% now offer at least some sustainability disclosure, according to a major new report released today by the Social Investment Research Analyst Network (SIRAN), a working group of the Social Investment Forum (SIF), and conducted by the independent investment research firm KLD Research & Analytics, Inc.
Launched at Institutional Investor Events’ 2nd Annual Forum on Responsible Investing, produced in association with SIF, the SIRAN report also found that among the seven countries in the study, South Africa emerged as the overall leader in sustainability reporting, with six companies meeting all five criteria, accounting for 75% of the country sample.
Sustainability reporting is designed to provide information on an entity’s environmental, social, and governance performance and impacts and their initiatives for improving their performance in these areas.
China was the laggard on sustainability reporting with three companies meeting none of the five criteria, and only 25% of Chinese companies surveyed meeting all criteria.
In a clear sign of room for improvement in reporting by emerging market companies, only 27% of the surveyed firms made use of the Global Reporting Initiative (GRI) reporting framework, a widely recognized standard for environmental, social and governance (ESG) reporting, in their report.
In addition to the release of the report, SIRAN, working in partnership with the International Working Group (IWG) of SIF, have also formed a new international coalition of NGOs, investment managers, and institutional asset owners to push for improved disclosure in emerging market countries.
The coalition has the support of a broad range of organizations including the GRI, the PRI in Emerging Markets and Developing Countries unit of the United Nations Environment Programme’s Principles for Responsible Investment, Ceres, and the Association for Sustainable and Responsible Investment in Asia (ASrIA).
The coalition has already attracted signatories representing $199 billion in assets under management for an investor sign-on statement asking emerging market companies for improved sustainability disclosure.
Coalition members will use the statement along with company meetings as part of an advocacy campaign that will work to move the needle in time for the next report update.
“We are encouraged that companies in emerging markets are getting the message: analysts need information about environmental, social, and governance performance in order to identify the best companies in which to invest. Companies that are transparent will be rewarded by the market,” says Paul Hilton, director of Advanced Equities Research, Calvert.
“Although the results are encouraging, it is important to emphasize that a company can produce a high quality sustainability report and still fail to achieve sustainability in the areas relevant to its sector, such as climate change for utilities or human rights and the environment for mining companies. At the same time, a sustainability report provides an important tool for stakeholders to communicate with companies about a range of issues, and allows companies to publicly establish goals and benchmarks for improvement,” adds Noel Friedman, managing director of Research Products, KLD.