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.
Todays 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.
The recommendations, highlighted in the report Investor Listing Standards Proposal: Recommendations for Stock Exchange Requirements on Corporate Sustainability Reporting, will be formally submitted this week to stock exchange members of the WFE in conjunction with the launch of an exchange comment period that will run for several months.
"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 worlds 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 nations 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 standardone 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.