Call for ESG Disclosure from "Across the Pond"

Earlier this week, a coalition of over 50 investment firms and professionals led by the US SIF called on the Securities and Exchange Commission (SEC) to require listed companies to report on ESG issues.

They asked the SEC to mandate annual reporting on sustainability indicators in accordance with the GRI framework and on other material ESG matters.

This follows Eurosif’s call on European institutions in April to require disclosure of ESG data by listed companies.

These initiatives give additional support to the view that improved reporting will help strengthen financial markets and foster sustainable business practices.

Where is PADA's "Investment Impact Committee"?

This question is promped by the Annual Report of the Personal Accounts Delivery Authority (PADA).

In Appendix A, you will find details of PADA’s Advisory Committees – the "Consumer Representative Committee" (from Age Concern to Which?), the "Scheme Management and Trustee Advisory Committee" (the pensions professional bodies) and the "Employer Representative Committee" (CBI, etc.).

But where is the "Public Interest Committee" or the "Other Stakeholders Committee"? Or even just the "Investment Impact Committee"? For example, although Personal Accounts will become an investor with global impact, there is no representation for the Climate Group, the Ethical Trading Initiative or indeed for the investor relations functions of the businesses whose shares Personal Accounts will hold to pay our future pensions. Some mistake surely?

From Crisis to Recovery: Reshaping Capital Markets

I have contributed a chapter on sustainable capital markets to a new Green Alliance pamphlet “From crisis to recovery: New economic policies for a low carbon future".

In it, I describe our policy recommendations to tackle the underlying issues that drive today’s dysfunctional investment approaches. We think this needs not just better regulation but also improvements to leadership, cultural norms and external scrutiny.

Specific proposals include:

• Pension funds and other major investment owners should be required to report on how they implement their sustainable investment policies
• Publicly owned investment holders should be required to be responsible owners and report annually on their progress
• Greater transparency should be demanded of both companies and institutional investors
• The objectives of financial regulators should enable them to take greater account of the wider public interest, including sustainable development.

It would be great to have your comments on these suggestions and the rest of the chapter.

Walker Review consultation document published

Recommendations from the Walker Review have been published in a consultation document today.

UKSIF will be responding over the summer to this and to last week’s HM Treasury report “Reforming financial markets”.

Do please respond to these too. Deadlines are 30 September (HMT) and 1 October (Walker).

"Investing in a Sustainable Recovery" Initiative

Details about the “Investing in a Sustainable Recovery” initiative are now available on the UKSIF web site.

There is a short description and notes from its first two roundtables. The third roundtable in May focused on “green bonds” and discussed a paper on “climate bonds” by Sean Kidney and colleagues.

The Initiative is convened by Tomorrow’s Company, UKSIF and the HSBC Climate Change Centre of Excellence, and supported by The London Accord and Network for Sustainable Financial Markets. Participation is by invitation only to institutional investors in fixed income and other asset classes, and relevant policy influencers.

Game-changing Lessons from Microfinance

The Microfinance Club UK event I attended last night suggested to me a number of lessons and parallels for financing a sustainable recovery in the UK that we can draw from microfinance.

The event was the launch of a new book by Elizabeth Rhyne of Accion, 'Microfinance for Bankers and Investors'. Her key message is that where banks are sluggish and fail to innovate, others move in. She provides a number of case studies of retailers and technology providers who have been such game-changers. For example Vodaphone in Kenya and the Mexican electronic retailer, Grupo Elektra which in five years has attracted 8 million credit clients to its in-store banking business.

The event also discussed the impact of the financial crisis and the new report by CSFI which identifies that the greatest risks to microfinance stem from the current crisis; bad loans, shortage of liquidity etc.

Elizabeth Rhyne argued that microfinance was also suffering because stability preservation had taken precedence over the access agenda in public policy responses, with consumer protection not being taken seriously.

This concern has driven innovation, with a number of microfinance institutions coming together to launch The Campaign for Client Protection, to ensure that financial providers take concrete steps to protect low income customers from harmful products and to ensure they are treated fairly.

Practical Regulation for "Desirable Social Objectives"

Over the last few weeks, UKSIF has been responding to consultations on financial reform and on information disclosure by pension funds.

I notice that, speaking in China recently, FSA Chairman Adair Turner said “We need above all to see markets not as ends in themselves, but as tools to achieve desirable social objectives. Financial markets have major and important roles to play in ensuring the allocation of capital to most efficient uses. But they will not operate perfectly and smoothly without effective regulation and oversight.”

The UKSIF web site now contains our response to the Turner Review, our recommendations to the 2009 Review of the Combined Code, and our comments on the Office of Fair Trading’s Financial Services Strategy.

We also responded to the DWP “Review of Disclosure of Information Requirements applying to Occupational, Personal and Stakeholder Pension Schemes” to call for government action to require greater transparency by pension schemes about responsible investment policies and their implementation. This built on the low level of transparency identified in our “Responsible Business: Sustainable Pension" 2009 report published earlier this month.

Our consultation responses have all focused on practical regulation and oversight measures to achieve desirable objectives for the real economy, society and the environment.

UKSIF-Oxfam Meeting with Financial Secretary: Common Priorities for Financial Reform

A joint delegation of responsible investors and leading NGOs met recently with Financial Secretary Stephen Timms MP. It was led by Paul Abberley, Chief Executive of Aviva Investors London and convened by Oxfam GB and UKSIF.

The delegation demonstrated how a common agenda is emerging between responsible investment leaders and major NGOs on priorities for financial reform to achieve a sustainable recovery. We discussed priorities for both UK and International/G20 action.

Our list of priorities is now available, as “Financial Reform for a Sustainable Recovery: NGO and Responsible Investor Priorities”, on the UKSIF web site.