A group of institutional investors, green NGOs and UN agencies have this week written to ministers scheduled to attend the Rio+20 Earth Summit, calling on them to agree new rules requiring large businesses to report on material environmental, social and governance issues.

The Corporate Sustainability Reporting Coalition (CSRC), which includes investors with approximately $2trn of funds under management, has endorsed an open letter sent to ministers by Paul Abberley, interim chief executive at Aviva Investors, that argues businesses should be forced to report on environmental issues or explain why they are not material to their operations.

“A commitment from UN member states to work on an international agreement requiring companies to integrate sustainability issues in their annual report and accounts, on a report or explain basis, would be a realistic, tangible and meaningful success from the Rio+20,” the letter states.

“Sustainability reporting is also a vital component in creating a responsible approach to capitalism. If investors continue to receive information that is short-term and thin, then these same characteristics will continue to define our markets.”

Growing numbers of companies now report on their carbon footprint and other environmental metrics through a range of voluntary schemes such as the Carbon Disclosure Project, while some governments have in place rules requiring firms to report on their greenhouse gas emissions.

However, a majority still fail to provide investors with environmental information, a scenario that progressive investors have long bemoaned on the grounds that it means they do not have full oversight of the risks a business faces. As such, the CSRC would like to see the introduction of global reporting requirements similar to international financial reporting rules that would allow investors to assess a firm’s environmental performance while also encouraging executives to invest in greener business models.

“This simple reporting step by companies will create the right kind of discussions within boardrooms, throughout firms and encourage investors to think about the sustainability of the firm,” said Abberley. “Today, while investors can see a company’s profit and loss statement and the underlying cash flows, they typically get little if anything about a company’s sustainability. At present, 75 per cent of companies do not report on sustainability issues at all. While this trend is improving, at the current trajectory it will be decades before sustainability reporting is common practice across global markets.”

Wolfgang Engshuber, chair of the advisory council of the UN-backed Principles for Responsible Investment (PRI), which also supported the letter, said the failure to introduce global reporting rules is hampering the investment sectors efforts to tackle climate change and other environmental risks.

“Responsible long-term investors cannot make prudent investment decisions unless they have high-quality information on companies’ exposure to long-term drivers of financial risk and return, such as climate change, resource scarcity and global demographic and social changes, and the quality of their responses to them,” he said in a statement.

“To enable investors to do this, the PRI Initiative believes that governments should take steps to require companies to report publicly on how they have taken account of material sustainability factors or explain why they do not.”