Sustainability advocacy group Ceres, in collaboration with BlackRock and other major institutional investors, today announced an initiative to engage global stock exchanges via the World Federation of Exchanges on a possible uniform reporting standard for sustainability reporting by all exchange members.
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Sustainability advocacy group Ceres, in collaboration with BlackRock and other major institutional investors, today announced an initiative to engage global stock exchanges via the World Federation of Exchanges (WFE) on a possible uniform reporting standard for sustainability reporting by all exchange members.
Today’s launch includes specific recommendations for integrating environmental and social disclosure requirements into listing rules for companies listed on U.S. and global stock exchanges. The proposal was developed by Ceres’ Investor Network on Climate Risk (INCR) and its member-driven Investor Initiative for Sustainable Exchanges. Over 100 institutional investors from six continents helped shape the listing standards proposal.
"We need a joint solution that will help bring more consistent and comparable information to all markets, and will not leave any one exchange at a competitive disadvantage for taking leadership in this space," NASDAQ OMX CEO Robert Greifeld said, speaking of the sustainability disclosure engagement process. NASDAQ OMX and Ceres have been working together for almost two years on this issue.
The start of the comment period coincides with the announcement yesterday that the WFE has launched a Sustainability Working Group to discuss and debate sustainability disclosure issues within the exchange community. Exchanges will submit their feedback on the Investor Listing Standards Proposal directly to the WFE.
“Cross border collaboration by stock exchanges will help shift public companies towards more comparable and meaningful disclosure of ESG (environmental, social and governance) risk factors,” said Gwen Le Berre, Vice President of Corporate Governance and Responsible Investment at BlackRock, the world’s largest asset manager with $4.3 trillion in assets under management. “This will enable investors to more accurately value companies and make better informed investment decisions.”
“We know from experience that sustainable, long-term growth requires integrating ESG considerations into the investment process," added New York State Comptroller Thomas P. DiNapoli, trustee of the New York State Common Retirement Fund, one of the nation’s largest public pension funds. "A global standard for sustainability reporting would give investors data to assess performance and risk, while allowing exchanges and companies to address specific market regulations and cultures."
“For years, investors have been decrying the current state of corporate sustainability disclosure as woefully insufficient and not comparable,” added Mindy Lubber, president of Ceres and director of INCR. “The time has come for a broadly-adopted sustainability disclosure standard—one that moves beyond voluntary approaches. We look forward to the feedback from exchanges, and their recommendations for advancing robust and useful sustainability reporting worldwide."
NASDAQ OMX Vice Chairman Meyer "Sandy" Frucher stressed, “What we hope comes out of this process is strong support by exchanges around the globe to move together to create a more uniform approach to sustainability reporting.
"We committed last year, at the urging of institutional investors within Ceres' Investor Network on Climate Risk, to provide thought leadership for our listed companies on sustainability reporting guidance," Frucher continued. "To provide us with greater clarity on what investors want in such guidance, INCR, with support from the Principles for Responsible Investment, launched a global consultation among investors, and presented us with a proposal that we are now discussing with other exchanges.”
Ceres is an advocate for sustainability leadership. Ceres mobilizes a powerful coalition of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Ceres directs the Investor Network on Climate Risk (INCR), a network of over 100 institutional investors with collective assets totaling more than $12 trillion. Ceres also directs Business for Innovative Climate and Energy Policy (BICEP), an advocacy coalition of nearly 30 businesses committed to working with policy makers to pass meaningful energy and climate legislation. For more information, visit www.ceres.org or follow on Twitter .
Additional Quotes in Support of Investor Listing Standards Proposal:
“Stock exchanges have a key role to play in promoting better ESG disclosure and ultimately performance by listed companies, and we encourage members of the WFE sustainability working group to consider these guidelines.”
-Fiona Reynolds, Managing Director, Principles for Responsible Investment
“Calvert believes that financially material ESG listing standards, supported by the Investor Initiative for Sustainable Exchanges, will improve transparency, liquidity, and marketability for exchange-listed companies. That’s why Calvert actively encourages the companies we invest in to support the development of material ESG listing standards.”
“Investors and companies alike are increasingly acknowledging the materiality of environmental, social and governance (ESG) factors, supporting investor demands for more accessible, comparable and integrated ESG data to help them meet their fiduciary responsibilities. We strongly encourage the world’s exchanges to demonstrate their forward-looking leadership in this area, and welcome the benefits that a consistent listing standard for ESG disclosure would bring for companies and investors.”
“Fifteen years ago, it was almost unimaginable that thousands of companies and other organizations would produce sustainability reports. Unimaginable that is, apart for a small group of visionary organizations and thinkers that helped found the Global Reporting Initiative (GRI) – a group in which Ceres played a pivotal role. The approach by the INCR to utilize the GRI Guidelines would build on the practice already established by thousands of companies that report voluntarily, and further advance global transparency through the disclosure of sustainability information reported by listed companies.”
-Ernst Ligteringen, Chief Executive, Global Reporting Initiative
“It is increasingly clear that environmental, social and governance performance can affect corporate financial performance, and therefore investors. It is in the interest of stock exchanges around the world to make reporting of ESG information a requirement for listing, which will help investors understand these potential risks and opportunities that are now inconsistent, vague, and in many cases downright missing, in corporate reporting to investors. Adoption of this proposal would be a service to investors everywhere.”
Julie Fox Gorte, Senior Vice President for Sustainable Investing, Pax World Management LLC
“The time has come for a global standard to provide investors with a baseline understanding of the sustainability performance of listed companies. Investors need 21st century disclosure to allow us to address 21st century risks and opportunities.”