Listing criteria should include sustainability reporting, group says
A group of more than 100 institutional investors is pushing stock exchanges worldwide to adopt a series of uniform reporting standards that would allow investors to better gauge the sustainability of companies they invest in.
Advocacy group Ceres and a coalition of investors and organizations including BlackRock, NASDAQ OMX, the Global Reporting Initiative and others have launched a campaign to persuade the World Federation of Exchanges and its members to incorporate reporting standards for ESG principles into their requirements for listing.
In the proposal, the coalition suggests all listed companies worldwide should be required to report on 10 areas, including ethical oversight, environmental impact, government relations and political investment, climate change, diversity, employee relations, human rights, and more.
‘What we hope comes out of this process is strong support from exchanges around the globe to create a more uniform approach to sustainability reporting,’ says Meyer Frucher, NASDAQ’s vice chair, in a press release announcing the proposal. ‘We committed last year, at the urging of institutional investors within Ceres’ Investor Network on Climate Risk, to provide thought leadership for our listed companies on sustainability reporting guidance.’
The report goes on to say listed companies should be required to include in their annual reports explanations of how they determine which ESG principles affect them most, how they determine which principles to focus on and who is involved in the process. Listed companies would also be required to outline the connection between ESG issues and their financial performance, growth, accounting, market position and business strategy.
Companies would further be required to include in their annual filings a hyperlink to an ESG disclosure index that will outline where more specific information on their existing ESG issues and key performance indicators can be found.
‘Cross-border collaboration by stock exchanges will help shift public companies toward more comparable and meaningful disclosure of ESG risk factors,’ says Gwen Le Berre, a vice president at BlackRock, in the press release. ‘This will enable investors to more accurately value companies and make better-informed investment decisions.’
