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33% of 1078 brands get zero on reporting social compliance
Apr '12
Adidas, Nestlé and Air France-KLM were among 39 companies in a survey of 1,078 companies that received top marks for reporting on social or environmental risks in 2011. More than a third of the companies in the annual evaluation by Norges Bank Investment Management (NBIM), manager of the Norwegian Government Pension Fund Global, scored zero.

“Failure to manage social and environmental risks may over time hurt company profits and the fund's investments,” says Anne Kvam, NBIM's global head of ownership policy. “We've identified three areas of particular concern that companies need to address – children's rights, climate change and water scarcity. While our findings show a slight improvement in how businesses reported on risks in these areas in 2011 compared with 2010, the overall level of reporting is still far too low.”

NBIM has published documents outlining how the companies we invest in should manage risks related to children's rights, climate change and water scarcity in their operations and supply chains. We annually evaluate the extent to which businesses in industries with high exposure to these risks meet our expectations. Our assessments are based on the companies' public reporting on these issues. NBIM published reports showing the findings for 2011.

Walt Disney, PVH, Intel, Hennes & Mauritz, Motorola Mobility, Gildan Activewear, Xstrata, Ericsson and Anglo American were among 14 companies to get top marks for their reporting on the risks of child labour use and children's rights violations in 2011. Adidas, Gap, Next, Bayer and BHP Billiton were new on the list of companies with top scores. Of the 452 companies assessed for their reporting in this area, 41 percent got zero points, compared with 44 percent the year before, when NBIM first disclosed the names of the best performers in this category.

“Child labour that prevents children from getting an education or otherwise harms their rights holds back sustainable development,” says Kvam. “Another concern for a long-term investor like NBIM is the risk to businesses from climate change and increasingly scarce water resources.”

Air France-KLM, Air Products & Chemicals, BASF and Constellation Energy Group were among 11 companies to get top scores for reporting on risks related to climate change in 2011. The other best performers were E.ON, Hera, Iberdrola, Lafarge, Linde, Xcel Energy and Anglo American. A total of 17 percent of the 453 companies evaluated in this category got zero points.

Nestlé, Anglo American, Anheuser-Busch InBev and Danone were among 14 companies with the highest marks for reporting on water-related risks in 2011. GlaxoSmithKline, Kellogg, Kirin Holdings, Merck & Co, Molson Coors Brewing, PepsiCo, Pfizer, PG&E, SABMiller and Sanofi were also top performers. A total of 32 percent of the 447 companies assessed in this area scored zero.

“The companies with top marks have set high standards and we hope to encourage other businesses to follow suit by naming them,” says Kvam.

Norges Bank Investment Management (NBIM)

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