Sustainable Stock Exchanges
Stock exchanges play a unique role in capital markets, one which positions them to be critical levers for improving the depth, consistency and comparability of corporate disclosure on climate change and sustainability performance. Leading exchanges around the world have already implemented robust corporate education programs, sustainability-themed indexes, and even set standards for sustainability disclosure as a prerequisite for companies to list on the exchange.
There is now a global effort by investors, NGOs, and some stock exchanges to mobilize every exchange to adopt a listing standard for sustainability reporting.
The INCR Sustainable Stock Exchanges Working Group has played a critical role in this effort by engaging with five key stock exchanges and requesting a listing standard on sustainability disclosure. The exchanges include NYSE Euronext, NASDAQ OMX, the Toronto Stock Exchange--part of TMX Group, the Mexican Stock Exchange, and Frankfurt-based Deutsche Borse. In-person meetings resulted in a common request to INCR members: tell us exactly what you want in a listing standard, and which Key Performance Indicators investors agree upon.
This request led INCR members to form the Listing Standards Drafting Committee, whose job was to produce a consultation paper to pinpoint what was essential sustainability information for the investment process, in a way that gave companies some flexibility, and that gave investors some consistent presentation of data across markets.
After nearly a year of engagement with INCR members and Ceres staff in 2012, NASDAQ OMX announced a formal commitment to promote sustainable investment and improved environmental, social, and governance (ESG) disclosure among companies listed on their exchange. NASDAQ OMX was one of only five exchanges - and the only exchange based in North America - to make this commitment at the Sustainable Stock Exchanges Global Dialogue in Brazil in June 2012. Since then, it has committed to discuss a global standard for ESG reporting with other exchanges and the World Federation of Exchanges.
A report on progress since the launch of the global Sustainable Stock Exchanges initiative in 2010 (convened by Aviva, the UN-backed Principles for Responsible Investment, and other UN partners) shows a growing commitment by exchanges worldwide to sustainability initiatives, including 86% of surveyed exchanges indicating that they already had or were planning to launch sustainability indices.
The Johannesburg Stock Exchange has a listing requirement on integrated reporting, BM&FBOVESPA has guidance and trainings on sustainability reporting using the Global Reporting Initiative. And the Hong Kong Exchange just produced a comprehensive list of key performance indicators on sustainability issues that companies should report.
“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