Stock Exchanges and Sustainability
Stock exchanges play a unique role in shaping more sustainable capital markets. Stock exchanges are critical levers for improving the depth, consistency and comparability of corporate disclosure on sustainability performance, including climate change risks. Leading exchanges around the world have implemented robust corporate education programs, sustainability-themed indexes and set minimal standards for sustainability disclosure as a prerequisite for companies to list on those exchanges.
The list of governments and stock exchanges around the world requiring or encouraging corporate sustainability disclosure continues to grow—a recent study shows that there are currently 180 laws and regulatory standards in 45 countries calling for corporate sustainability reporting. Additionally, institutional investors have increased their focus on the critical role of stock exchanges in creating sustainable capital markets, including supporting mandatory requirements for stock exchanges to promote sustainability disclosure that is consistent and comparable across markets.
To bring attention to these issues, the United Nations created the Sustainable Stock Exchanges Initiative (SSEI). The SSEI brings together stock exchanges, regulators, investors and other key stakeholders to promote improved disclosure on environmental, social and governance (ESG) issues, and is co-organized by the Principles for Responsible Investment (PRI), the United Nations Conference on Trade and Development (UNCTAD), the United Nations Environment Programme Finance Initiative (UNEP-FI) and the United Nations Global Compact (UNGC).
As part of a coordinated effort by Aviva Investors and the PRI to enlist investors to engage with exchanges to advance the goals of the SSEI, INCR committed to engaging with five stock exchanges regarding corporate sustainability reporting and listing standards: NASDAQ OMX, NYSE Euronext, the Bolsa Mexicana de Valores, the Toronto Stock Exchange of the TMX Group, and Deutsche Börse.
INCR Stock Exchanges Listing Standards Initiative
Following the creation of the United Nations-led global effort—the Sustainable Stock Exchanges Initiative (SSEI)—INCR formed a Sustainable Stock Exchanges Working Group to support the SSEI and convene a group of INCR members to coordinate engagement with stock exchanges. Those engagements resulted in Ceres and INCR developing the INCR Listing Standards Proposal: Sustainability Disclosure Listing Standard for Global Stock Exchanges. The Listing Standard has been submitted to NASDAQ OMX and is currently under review by other exchanges before being formally submitted to the World Federation of Exchanges (WFE). Ceres and INCR are working to mobilize every stock exchange to adopt a listing standard for sustainability in addition to engaging more investors and the WFE to build support for the ultimate adoption of the INCR Listing Standard. For more information, please click here.
After engagement with INCR members, NASDAQ OMX joined the SSEI as a “Partner Exchange” and made a formal commitment to promote sustainable investment and improved ESG disclosure and performance among its listed companies. Learn more about sustainability progress by NASDAQ OMX and other major stock exchanges.
For more background on how investors are increasingly collaborating on stock exchange engagement, please see here.
“Exchanges play a vital role in the move towards more sustainable capital markets as they have the opportunity to influence and monitor companies seeking to access equity markets.”
Paul Abberley, Chief Executive, Aviva Investors London