Following the creation of the United Nations-led Sustainable Stock Exchanges Initiative (SSE Initiative), in 2009, the Investor Initiative for Sustainable Exchanges (IISE) Working Group was formed to convene INCR members to coordinate engagement with stock exchanges on sustainability reporting listing requirements.
While the SSE Initiative facilitates ongoing discussions between stock exchanges and stakeholders on exchange best practice, it has to date largely advocated for voluntary ESG disclosures. Many INCR members, however, have been vocal proponents of a mandatory “floor” for stock exchanges on sustainability reporting, i.e. a minimum standard applicable to all exchanges on key aspects of ESG transparency. Ceres believes that exchanges have a responsibility to the market to supply investors and stakeholders with the ESG data they need. Moreover, with the 10 top-ranked exchanges located in countries with mandatory sustainability disclosure policies, a Corporate Knights’ recent report demonstrates that mandatory ESG disclosure rules are more effective at inducing companies to report their sustainability performance than voluntary rules. In their function as centralized arbiters of market data, one can reasonably argue that stock exchanges are also well positioned to identify and create a minimal threshold for ESG reporting for the marketplace.