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MONDAY SEPTEMBER 15th TICKER: Last week UK equities indices fell with the FTSE 100 down 0.70%. The FTSE 250 was down 1.30%; and the FTSE All-Share was down 0.80%. - London’s IPO market has bounced back in 2014, as the year shapes up to bring in a bumper crop of flotations on the UK main market. New research by Capita Asset Services shows a dramatic uplift in the number of companies making their debut on the London Stock Exchange, with more companies taking to the stage than in any year since the recession - European equity trading venue BATS Chi-X Europe has signed a partnership deal with BX Swiss (BX), Switzerland’s only independent exchange, in which the pair will work together on cross listings for exchange-traded funds and trade reporting - CME has become the third entity to file an application for recognition as a trade repository in Québec, joining DTCC Data Repository and ICE Trade Vault - TheCityUK and the China-Britain Business Council (CBBC) have deepened their engagement in China’s economic reform plans, presenting a new series of expert working papers on the approaches China could take to develop its Free Trade Zone - Paris-based alternative investment firm Silver Time Partners has selected Caceis as the asset servicing partner for its first Luxembourg UCITS “Silver Time LOQ Equity Sicav’ fund which launched at the start of September - Private equity fund managers are not doing enough to appease their institutional backers with regards to the fees they charge, according to new research from Preqin - Societe Generale Securities Services has been mandated by CILOGER, a French real estate asset manager, to provide depositary and regulatory reporting services within the framework of the Alternative Investment Funds Management Directive (AIFMD) - The Financial Industry Regulatory Authority (FINRA) has issued a new Investor Alert called ‘Frontier Funds—Travel With’ Care cautioning investors interested in funds that invest in frontier markets to carefully consider the heightened risks.

Policy intervention needed as momentum stalls on ‘sustainability’ says new Aviva Investors’ report

Monday, 18 June 2012
Policy intervention needed as momentum stalls on ‘sustainability’ says new Aviva Investors’ report Trends in Sustainability Disclosure: Benchmarking the World’s Composite Stock Exchanges, a report produced by Aviva Investors in partnership with CK Capital, reveals that while a number of European stock exchanges reflect a high level of integrated sustainability reporting from constituents, only 52 companies out of 4,001 mid large and mega caps around the world engaged in ‘complete’ first generation sustainability disclosure in 2010.  The paper has been prepared for the Sustainable Stock Exchange 2012 Global Dialogue, hosted by UNCTAD in Rio. http://www.ftseglobalmarkets.com/

Trends in Sustainability Disclosure: Benchmarking the World’s Composite Stock Exchanges, a report produced by Aviva Investors in partnership with CK Capital, reveals that while a number of European stock exchanges reflect a high level of integrated sustainability reporting from constituents, only 52 companies out of 4,001 mid large and mega caps around the world engaged in ‘complete’ first generation sustainability disclosure in 2010.  The paper has been prepared for the Sustainable Stock Exchange 2012 Global Dialogue, hosted by UNCTAD in Rio.

The report says that while the majority of the world’s mid, large and mega-caps engage in some form of first generation sustainability reporting, it is now clear that the proportion of companies voluntarily disclosing each of the first generation indicators is slowing. Steve Waygood, chief responsible investment officer at Aviva Investors, says, “Investors are increasingly demanding sustainability information from companies to inform their broader decision making, deepen the quality of market information available and ultimately the quality of our capital markets, so this decline is cause for concern. Our study shows a clear divergence across exchanges and sectors on the level of disclosure on sustainability issues and growing evidence of a slowdown in the uptake of sustainability reporting practices.  This reflects the lack of a co-ordinated reporting framework.”

“We see a real opportunity for policymakers to step in and define a common set of sustainability indicators. The Corporate Sustainability Reporting Coalition launched last month, which represents investors with assets under management of approximately $2trn, is urging all nations at Rio+20 to commit to develop an international policy framework. This framework should look to foster the development of national measures requiring, on a report or explain basis, the integration of material sustainability issues within the corporate reporting cycle of all listed and large private companies.” Doug Morrow, Vice President of Research at CK Capital and lead author of the report, adds: “This study shows that while the majority of the world’s largest companies by market capitalisation report some first generation sustainability indicators, the ‘actionability’ of this data for investors and other stakeholders is constrained by a lack of completeness, standardisation and timeliness.”

The wonder of it all is that with all the problems companies face right now in finding new business opportunities and markets that any investors are insisting on these kinds of constraints.  However, be that as it may, the report ranks the world’s composite stock exchanges* according to the sustainability disclosure practices of their listed companies.  The report investigates disclosure rates and timeliness for a range of seven “first generation” sustainability indicators:  energy, greenhouse gas (GHG) emissions, water, waste, lost time injury rate, payroll costs and employee turnover.

In a ranking of the world’s composite stock exchanges by overall sustainability disclosure, the Netherlands comes out on top, with Denmark (2), Finland (3) Spain (4) and South Africa (5) also in the top five. The Nordic countries rank particularly well with four countries appearing in the top ten. The two emerging market exchanges that score well are South Africa (5) and Brazil (9)**. 

Certain countries are also excelling in disclosure around particular “first generation” indicators with: 

Finland scoring the highest disclosure rate on four of the seven indicators: payroll data (91%), waste (83%), energy (78%) and GHG emissions (52%) South Africa has the fastest growing disclosure rate, ranking first in five of the seven indicators: water, waste, GHG emissions, employee turnover and lost time injury rate

Companies trading in Denmark are the world’s most timely sustainability reporters; 57% of all large companies on the Danish composite with a Q4 2011 financial year end had published 2011 sustainability data by 1 May 2012

Overall, financial companies had the lowest sustainability disclosure of all industries, ranking last on five of the seven indicators; energy, GHG emissions, water consumption, waste and lost time injury rate 

Utility companies came out on top in most indicators and ranked first on disclosure around GHG emissions, water consumption, waste and employee turnover

Regionally, Europe and South East Asia scored highest as being the quickest to market with sustainability data. Waygood concluded: “Markets are driven by information. If the information the market receives is short term, then these characteristics will define the way these markets operate. It is time for regulators to act.”

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