At Clinton and UN Forums, Investors Push for Sustainability Ratings, Mandatory Integrated Reporting

Investors have launched two major drives to improve the quality of information on companies and funds, pushing a rating system for social and environmental impacts, and asking countries to mandate sustainability reporting in annual reports.
At the Clinton Global Initiative yesterday, B Lab announced that 15 investors are declaring an investment preference for funds and companies rated by its Global Impact Investing Ratings System (GIIRS).

B Lab also launched GIIRS Ratings & Analytics, a set of tools to help investors analyze aggregated, verified and comparable data on the social and environmental impact of companies and funds across geography, sector, organizational maturity, and size. And the non-profit announced that three GIIRS Pioneer Funders – Deloitte, Prudential Financial, Inc., and The Rockefeller Foundation – have committed $9 million to accelerate industry adoption of the GIIRS Ratings & Analytics platform.

GIIRS is a system assessing the social and environmental impact of developed and emerging market companies and funds with a ratings and analytics approach analogous to Morningstar investment rankings and Capital IQ financial analytics.

B Lab says that GIIRS Ratings & Analytics will allow entrepreneurs, companies, and fund managers to better serve their customers, workers, and communities by raising capital from mission-aligned investors based on the social and environmental impact of their underlying businesses or portfolio companies. The launch follows a global beta test with more than 200 companies across 30 countries from 25 leading impact investing funds (the GIIRS Pioneer Companies and Funds, respectively).

The GIIRS Pioneer Investors are a diverse group of global private equity investors and credit providers, including mainstream global financial institutions, foundations, family offices, leaders in social finance, and a multilateral development bank. They include: Annie E Casey Foundation, Armonia LLC, Calvert Foundation, Farm Capital Services LLC, Gatsby Charitable Foundation, Impact Investing Foundation, Inter-American Development Bank, J.P. Morgan, KL Felicitas Foundation, W.K. Kellogg Foundation, Prudential Financial, Inc., The Rockefeller Foundation, RSF Social Finance, Skoll Foundation, and The Tony Elumelu Foundation. GIIRS expects to announce more GIIRS Pioneer Investors in the coming months.

With the support of GIIRS Pioneer Investors and Funders, in five years GIIRS aims to provide Impact Ratings for more than 2,500 companies and over 350 funds. This will provide over 150 institutional and high net worth investors with the ability to benchmark social and environmental impact, for the first time, in the same way that financial performance is benchmarked today, B Lab says.

By providing credible, comparable and verified impact ratings and creating a powerful analytics platform, B Lab says that GIIRS provides the needed capital markets infrastructure to drive $1 trillion toward impact investments in 10 years.

The Clinton Global Initiative was also the setting where this week companies including Goldman Sachs, Johnson Controls and Jones Lang LaSalle announced a three-year collaboration to incorporate energy efficiency measures into building design and carefully measure the economic benefits.

Meanwhile, a coalition of institutions led by Aviva Investors will today call on United Nations member states to develop a global policy framework requiring listed and large private companies to integrate sustainability information throughout their annual report and accounts – or explain why they are unable to do so.

The coalition represents financial institutions, professional bodies, NGOs and investors with assets under management amounting to $1.6 trillion. It includes organisations such as the Association of Chartered Certified Accountants, CA Cheuvreux, Generation Investment, Global Reporting Initiative and Hermes.

Paul Abberley, chief executive of Aviva Investors London, will announce the “call to action” at today’s United Nations Private Sector Forum on Sustainable Energy for All, which is held in conjunction with the 66th Session of the UN General Assembly. The coalition is calling on states to adopt the framework at the United Nations Conference on Sustainable Development, the 2012 Earth Summit, which is taking place in Rio de Janeiro next June.

“Markets are driven by information,” Abberley said. “If the information they receive is short term and thin then these characteristics will define our markets.”

The coalition says that the international policy framework should adhere to two overriding key principles:

Transparency – UN member states should develop national regulations which mandate the integration of material sustainability issues in the annual report and accounts;

Accountability – UN member states should provide effective mechanisms for investors to hold companies to account on the quality of their disclosures, including for instance through an advisory vote at the AGM.

Aviva plc, Aviva Investors’ parent company, says it was the first financial services organisation to put its sustainability report within its annual report.