Nasdaq OMX Group, Inc. ESG Investor Expectations 2014
|Company||Nasdaq OMX Group Inc.|
|Filer||Calvert Asset Management Company, Inc.|
|Resolved Clause Summary||Report on investor expectations for encouraging ESG disclosure|
Environmental, social and governance (ESG) disclosure assists companies to compete in a global business environment characterized by finite natural resources, changing legislation, and heightened material ESG disclosure expectations, guidelines, and requirements. ESG disclosure allows issuers to publicize and gain strategic value from existing ESG efforts while identifying emerging risks and opportunities. Consistent ESG disclosure allows financial analysts, asset managers, issuers, and other stakeholders to ascertain and compare each issuer’s ESG exposure in a manner that facilitates improved analysis of each investment’s possible risk and return.
The World Federation of Exchanges (WFE) states that during the past five years, "social and environmental risks and opportunities have emerged ... to become commonplace long-term investment themes in the world's capital markets.”
Issuer ESG disclosure is rapidly increasing, according to Bloomberg LP. Bloomberg LP collects and disseminates ESG data on 220 indicators, and they note that ESG disclosure has increased from 1,000 to 6,000 companies since 2009.
Most importantly, exchange peers are leading the way in this sector by launching ESG disclosure listing standards.
- The London Stock Exchange requires listed companies to report total GHG emissions.
- The Hong Kong Exchanges and Clearing Limited recommends issuers disclose ESG performance on over a dozen criteria.
- The NYSE Euronext joined the Sustainable Stock Exchanges Initiative to support issuers in improving ESG disclosure as a criteria for listing standards.
- The Chinese Shanghai and Shenzen exchanges require certain industries to disclose an environmental assessment before initiating an IPO.
- The BM&F Bovespa tracks its issuers' ESG disclosures in a public database, increasing consistent ESG disclosure.
- The Johannesburg Stock Exchange asks issuers to complete, on a “comply or explain” basis, one integrated report combining financial and ESG information.
To remain competitive, exchanges should be aware of current market trends in issuer ESG disclosure listing standards.
We appreciate NASDAQ OMX’s (NASDAQ) engagement in many ESG initiatives globally, such as joining over 100 institutional investors to support the INCR Listing Standards Proposal: Sustainability Disclosure Listing Standards for Global Stock Exchanges for an ESG disclosure listing standard for regulated exchanges.
Yet it is not clear if, how, and when NASDAQ might consider applying consistent issuer ESG disclosure listing standards in the markets NASDAQ does business in, or if NASDAQ understands the issuer ESG disclosure expectations of investors in those issuers.
That shareholders request that our Board of Directors prepare a report assessing the current global expectations for issuer disclosure of ESG information and report to shareholders, by September 30, 2014, its findings and the Board’s recommended steps (if any, or their reasons for declining to make recommendations, if none) for encouraging ESG disclosure in the markets where The NASDAQ OMX Group, Inc. does business. The report should be prepared at reasonable cost, omitting proprietary information.