Stock Exchanges Play Increasing Role in Enhancing Corporate Sustainability
As the Sustainable Stock Exchanges (SSE) initiative rings the closing bell at the NASDAQ stock exchange today, the SSE is advancing new research and guidance on the role of stock exchanges in facilitating sustainability disclosure. The SSE, a United Nations initiative that explores how stock exchanges can promote corporate transparency and sustainability performance, is working with exchanges to utilize new research to advance their sustainable business strategies.
Recently-released studies by SSE partner United Nations Conference on Trade and Development (UNCTAD) together with Sustainalytics, CK Capital and Eiris provide fresh analysis on global sustainability disclosure trends, and guidance on best practices among stock exchanges in encouraging corporate sustainability reporting. The reports provide insight into the evolving role of exchanges, along with regulators, in creating a more transparent capital market.
Disclosure is an issue gaining traction globally, and for good reason. Currently, only 3 percent of the world’s large companies (117 out of 3,972) and 0.04 percent of the world’s small companies (20 out of 56,710) currently report in some form on what Corporate Knight’s defines as the ‘seven first generation sustainability indicators’ – the metrics that are broadly relevant across all industries and among the most widely disclosed by publicly traded companies globally.
The UNCTAD guidance stresses that there is no ‘one size fits all’ approach for stock exchanges and delivers a roadmap to guide exchanges through key questions, providing examples of best practices along the way. “Many exchanges and policy makers in the world may be new to the area of promoting sustainability reporting, but these promotion practices themselves are not new.” said Anthony Miller of UNCTAD’s Investment and Enterprise Division and a co-coordinator of the SSE initiative. “There are pioneering exchanges and regulators that have been doing these things for many years, and we can all learn a lot from their experience.”
Doug Morrow, Managing Director at CK Capital and lead author of “Trends in Sustainability Disclosure: Benchmarking the World’s Stock Exchanges, 2013,” said, “Emerging markets stock exchanges are on track to surpass their developed-world counterparts in quantitative sustainability reporting by 2015. This ‘catch-up’ process is being driven by many factors including policy leadership from stock exchanges themselves. Our analysis suggests that advanced disclosure practices are linked with mandatory, prescriptive and broad disclosure policies, and these can be implemented through stock exchange listing rules, capital markets regulations or by government legislation”.
Stephen Hine, Head of Responsible Investment Development at EIRIS, commented, “The insights shared by stock exchanges in the EIRIS report are an excellent resource for other stock exchanges seeking to implement sustainability initiatives for the first time, or those trying to make existing initiatives more effective. Whilst there will be challenges, they are surmountable. Through their key position in the financial ecosystem stock exchanges can provide powerful encouragement to sustainability, and the benefits from their sustainability initiatives will be for companies, investors and society as a whole.”
Source: UN Global Compact website