GLOBAL - Policy intervention is required on sustainability reporting on the world's stock exchanges as momentum has stalled, Aviva Investors has said.

Despite tougher regulations and the growing relevance of sustainability as an investment theme, the breadth of sustainability reporting on stock exchanges globally has fallen since its peak in 2008, according to a new report commissioned by Aviva Investors.

The 'Trends in Sustainability Disclosure: Benchmarking the World's Composite Stock Exchanges' report, produced 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.

While the majority of the world's mid, large and mega caps engage in some form of first-generation sustainability reporting, the report shows that the proportion of companies voluntarily disclosing each of the first-generation indicators is slowing.

Steve Waygood, chief responsible investment officer at Aviva Investors, said: "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."

Waygood said this slowdown reflected 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," he said.

"The Corporate Sustainability Reporting Coalition launched last month, which represents investors with assets under management of approximately $2trn (€1.6trn), 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."

In the report's ranking of the world's composite stock exchanges by overall sustainability disclosure - based on the seven first-generation sustainability indicators energy, greenhouse gas (GHG) emissions, water, waste, lost time injury rate, payroll costs and employee turnover - the Netherlands comes out on top, followed by Denmark, Finland, Spain and South Africa.

The Nordic countries rank particularly well, with four countries appearing in the top 10.

The two emerging market exchanges that score well are South Africa and Brazil, which was ranked ninth.

Finland scored the highest disclosure rate on four of the seven sustainability indicators, namely payroll data (91%), waste (83%), energy (78%) and GHG emissions (52%).

South Africa has the fastest growing disclosure rate, ranking first in water, waste, GHG emissions, employee turnover and lost time injury rate.

Overall, financial companies had the lowest sustainability disclosure of all industries, ranking last on 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.