Thursday, December 17, 2009

Emerging market companies lagging on ESG reporting

A new study concludes that although a significant number of emerging market companies have begun to report on some environmental, social and governance (ESG) issues, most do not report extensively or according to global standards.

The Social Investment Forum (SIF) says that 96% of emerging market firms reported on at least one ESG factor, but only 14 of 100 companies reported in accordance with Global Reporting Initiative guidelines.

Governance structures and board committees were the most commonly reported ESG indicator while environmental information was the least likely to be disclosed.

“This report clearly points to a need for companies in emerging markets to improve their ESG reporting practices, and investors must become a key driver in encouraging companies to bolster transparency,” says Lauren Compere of Boston Common Asset Management, co-chair of the SIF’s Emerging Markets Disclosure Project.

Companies from Brazil and South Africa were the most likely to issue reports using Global Reporting Initiative guidelines. The report notes that both countries operate a socially responsible stock market index.

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