Preparation docs suggest major sustainability reforms. This article originally appeared on Responsible-Investor.com.
The United Nations (UN) has put forward proposed measures for discussion at the Rio +20 summit in June that could have a significant impact on the way that companies report sustainability issues and large institutional investors, notably sovereign wealth funds (SWFs), consider responsible investing. A flurry of reports have been coming out of the UN in advance of the Rio event, which starts on June 20 and marks the 20th anniversary of the first landmark UN Conference on Environment and Development in Rio in 1992, also known as the Earth Summit. One major policy draft suggests a global framework be put in place requiring all listed and large private companies to “consider sustainability issues and to integrate sustainability information within the reporting cycle.” The proposal is part of action to promote a green economy found in one of the major strategic UN documents for the summit called the Zero Draft: Rio +20, which provides guidance to UN member states on proposed subjects for discussion. While there is no guarantee that the recommendation will be ratified it demonstrates an increasing push by the UN to formalize corporate ESG/CSR reporting.
Another recently released report by the High-level Panel on Global Sustainability convened by Ban Ki-moon, the UN Secretary General, titled “Resilient People, Resilient Planet: A Future Worth Choosing.” recommends that SWFs consider revising the current Santiago Principles ‘code of good practice’ to enable them to invest responsibly. It doesn’t elaborate on what measures might be taken. The total assets of SWFs currently stand at nearly $3 trillion, and are expected to reach between $6-$10 trillion by 2013. Twelve new sovereign wealth funds have been established since 2005. The report also suggest that boards of national and international public pension funds explore measures to apply sustainable development criteria to their investments given the importance of the assets they run. The report is significant because of the political power of its 22-member panel, which is co-chaired by Finnish President Tarja Halonen and South African President Jacob Zuma. It also included Kevin Rudd, Minister for Foreign Affairs and former Prime Minister of Australia, and Sheikh Abdallah Bin Zayed Al Nahyan, Minister for Foreign Affairs of the United Arab Emirates. The panel was established in August 2010 to formulate a new blueprint for sustainable development and low-carbon prosperity and will be a key feed-in document to Rio+20.