Corporate Social Responsibility (IVOR nr. 77) 2010/12.2.2.9:12.2.2.9 More cooperation between NGOs and financial market actors

Corporate Social Responsibility (IVOR nr. 77) 2010/12.2.2.9

12.2.2.9 More cooperation between NGOs and financial market actors

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As mentioned earlier, NGOs can contribute to developing a market for BES information products in several ways. Their potential roles are not (completely) fulfilled and linkages between NGOs and ESG Agencies are limited. The interviewees from the asset management industry and the ESG Agencies are mostly interested in the contribution of NGOs to the development of knowledge, the development of frameworks and the development of tools. This has been outlined in section 12.2.1.6. Another role for NGOs, i.e. as a source of information on company behaviour, is less acknowledged. Several potential roadblocks were mentioned:

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most NGOs are 'single issue' entities with their own agenda;

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NGOs do not collect information in a structural and transparent way;

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they tend to focus on controversies instead of undertaking an overall screening, which makes the information anecdotal; and

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the websites and search engines are often not considered to be 'user friendly' by the interviewed ESG Agencies; i.e. if NGOs would send a weekly or monthly newsletter on companies and BES to ESG Agencies, it would be easier for the latter to use the information.

Currently, the information provided by NGOs is free of charge. Payments might be an incentive for NGOs to deliver more targeted and useable information. Most interviewees have indicated, however, that they are reluctant to enter into a contractual relationship with NGOs. The fear of association is their main argument, because this might be a potential threat to the objectivity that is essential for ESG Agencies. A few of the interviewed agencies contended that they are indeed willing to pay for information from NGOs, subject to the traceability of information. Two others would at least be willing to consider payments, although there is currently no necessity to do so.1 On some rare occasions, independent consultants or reputable NGOs are commissioned to perform research assignments on specific BES issues (e.g. water scarcity).

Regarding awareness raising, also a role ascribed to NGOs, it was mentioned that the lack of a critical NGO in the field of BES is one of the reasons why BES is not on the agenda of financial institutions.

The general picture as sketched by the interviewed NGOs is that they are not really focused on cooperation with specialised agencies in the financial sector as far as biodiversity is concerned.2 Although the importance of the financial sector in the 'value chains' is well understood, limited (human) resources are otherwise directed. NGO strategies to influence investment decisions in view of protecting environmental interests typically encompass organising public awareness campaigns, direct engagement with company management, mobilising support from local stakeholders, and research on impacts. Knowledge and data available within NGOs are mostly not targeted at, nor formatted for use by financial market actors.

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