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ESG roundup: Sustainable exchanges, oekom, Allianz

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  • ESG roundup: Sustainable exchanges, oekom, Allianz

EUROPE - A majority of stock exchanges remain committed to promoting greater corporate responsibility on sustainability issues but are restricted in the actions they can take, according to a report by Responsible Research.

The report - called 'Sustainable Stock Exchanges: A Report on Progress' - found that exchanges remain in agreement that they have a responsibility to encourage greater corporate responsibility, with 76% acknowledging this compared with 71% in 2010.

Additionally, the survey found an increase - from 38% in 2010 to 57% - in the number of exchanges agreeing that strong sustainability requirements for listed companies made good business sense, although they pointed out that sustainability initiatives and products do not contribute significantly to their revenues.

Based on the report's findings, emerging market exchanges were more inclined to view environmental, social and governance (ESG) credentials as a competitive differentiator and reputation-enhancing factor.

But the implementation of mechanisms to promote sustainability disclosure continues to be an issue for exchanges, as they have found that, in an increasingly global and competitive market and with a reduced regulatory function, there are limits to the actions they can take on sustainability.

More than half of exchanges indicated this remit was jointly shared with regulators and legislators, with only two respondents considering the implementation of mechanisms to promote sustainability disclosure and accountability as being solely within their remit.

While stock exchanges indicated that institutional investors were generally supportive of their sustainability initiatives, nearly half also cited investor ambivalence as a factor that discouraged them from further action.

The survey was first commissioned by Aviva Investors in 2010 as part of the Sustainable Stock Exchange Initiative and resulted in the report 'Sustainable Stock Exchanges: Real Obstacles, Real Opportunities'.

The latest report surveyed 27 of the world's largest exchanges.
 
In other news, the Corporate Responsibility Review 2012 by Germany-based oekom research found that, in the run-up to the Rio+20 summit, only a minority of companies had shown sufficient commitment to sustainable development.

As of 31 December 2011, a total of 543 of the more than 3,100 companies (17%) rated by oekom research had been awarded oekom Prime status.

These included around 300 large companies from all the conventional sectors, as well as approximately 180 small and medium-sized enterprises from sectors that make a major contribution to sustainable development in areas such as renewable energies and recycling, for example.

Matthias Bönning, COO and head of research at oekom research, said: "A further quarter of companies are making good initial progress in relation to sustainability management, but have not yet systematically and comprehensively integrated relevant aspects into their management systems.

"However, over 57% of the companies we have rated have so far taken little or no action at all in this area."

In many industries that have a key role to play in sustainable development, companies' activities generally lag significantly behind what is required from the point of view of sustainability.

For example, only 23 of the 294 banks rated by oekom research - 7.8% - have shown sufficient commitment to be awarded oekom Prime status, when it is banks, above all others, that have the opportunity to lay the vital groundwork for a green economy by taking environmental criteria into account in their lending and investment policies, Bönning said.

Energy and water supply are also of central importance to sustainable development.

Although a large number of the 154 energy suppliers rated by oekom research are investing in renewable energies, coal, oil and in some countries also nuclear power still form the backbone of global energy supplies. Only 13% of the companies rated achieved oekom Prime status.

In the IT sector, which in recent years has outsourced much of its production to emerging economies in Asia, there are clear shortcomings with regard to labour rights.

In a sectoral comparison, manufacturers of household products received the highest score, with an average of 46.5 out of a possible 100 points, with the German detergent manufacturer Henkel coming out on top in this sector.

Manufacturers were followed by computer manufacturers (42), with Ricoh (JP) in first place, and the automotive industry (40.9), where Renault (FR) is currently the best performer in terms of sustainability.

The full report can be found here.

Lastly, a study by Allianz showed that growing demand for energy makes environmental protection an increasingly crucial investment topic.

Apart from investments in alternative energies, the handling of existing resources plays an increasingly important role, it said.

According to the study, the key to a "promising future" appears to lie in an increase in the productivity of resources and energy, while globalisation, demographic developments, climate change, resources scarcity - as well as a greater environmental awareness and responsibility by consumers - have changed the parameters for a sustainable economy.

The study expects particularly renewable, CO2-neutral energy sources to grow, as fossil fuel sources such as oil and gas are limited.

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