Stock Exchange Announces Sustainability Disclosure Guidelines

by Lora Babb

November 6, 2015 — Consumer demand, resource constraints, and an increasingly competitive marketplace (to name just a few factors) are causing more companies to focus on their environmental, social and governance (ESG) practices. News this week from the world’s largest stock exchanges demonstrates that a company’s ESG is also important to investors.

Large investors have been asking for improved and more standardized sustainability metrics in order to better compare companies and evaluate their long-term business risks. And on Wednesday, the World Federation of Exchanges delivered. The federation that represents 64 stock exchanges worldwide released guidelines for the ESG metrics it believes are important for companies to disclose to investors. As reported in the Wall Street Journal:

The guidelines from The World Federation of Exchanges could push stock exchanges to require listed companies to report on more than 30 metrics, such as energy consumption, employee turnover, human rights, and gender and board diversity.  Exchanges in the group can voluntarily choose to adopt some, if any, of these standards.

The federation set up a sustainability working group last year to coordinate guidelines for stock exchanges around the world that wanted to roll out listing rules in this area.  Exchanges in South Africa and Australia already require companies to report some of these measures under their own listing standards. (Read the full article here.)

The release of these guidelines is further indication that the market dynamic is rapidly changing — both consumers and investors are demanding stronger sustainability commitments and greater disclosure of businesses’ ESG. In order to remain competitive as this trend continues, a business must address its triple-bottom line. Learn why businesses of all sizes should care about ESG, and take the Root360 benchmark survey (at no cost) to see how “sustainably fit” your company is today.

Lora Babb is the Director of the U360 Business Sustainability Internship Program in Manomet’s Environmental Education & Outreach division. She has a Master’s in Environmental Law & Policy and nearly 20 years of environmental and sustainability experience in the business and nonprofit sectors. Her areas of interest and expertise include law and policy, climate change, food and agriculture, consumer products, toxins, and environmental justice.

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