Climate change is looking realer by the minute.
And with a growing recognition of the risks that climate change poses to the global economy, investor communities are taking steps to understand and manage those risks.
So in big news, an investor group announced April 8 of the first steps to set across-the-board sustainability listing standards for all stock exchanges worldwide.
This means that companies would be required to report on eight specific issues: climate change, diversity, employee relations, environmental impact, government relations, human rights, product impact and safety, and supply chain.
If it works, this will dramatically raise investor awareness about environmental, social and governance issues as need-to-know information.
Essentially, this reporting will shine a light on not only what and how much a company makes, but how they do it, and where, by whom, and their impact on the earth as a whole.
A group of investors today announced a Consultation Paper with recommendations for integrating sustainability disclosure requirements into listing rules for U.S. and global stock exchanges.
The draft recommendations were developed by nearly a dozen investors who are part of the Ceres-led Investor Network on Climate Risk (INCR). BlackRock, British Columbia Investment Management Corporation, and the AFL-CIO Office of Investment are among those who participated on the INCR Listing Standards Drafting Committee.
The initiative is part of a growing effort by investors and stock exchanges, including NASDAQ OMX, to make environmental, social and governance (ESG) disclosure a consistent requirement for corporate listings on stock exchanges. While several exchanges have adopted their own sustainability listing requirements and guidance, INCR members and NASDAQ OMX have set out to develop a uniform standard that all stock exchanges can use.
Bloomberg’s coverage of this story includes some helpful background as well.
Investors Propose Requiring Sustainability Data Disclosure
Investors Propose Data Disclosure Standard For Listing Companies
A global sustainability listing standard would allow investors to compare companies on their environmental, social, and governance performance.
The proposed listing standard would require companies to discuss how they determine which environmental and social issues are material to the company, to provide a link in their annual financial filings to a list of sustainability data, and to disclose information on eight specific sustainability issues or explain why they do not.The eight specific issues on which companies would be required to disclose information are climate change, diversity, employee relations, environmental impact, government relations, human rights, product impact and safety, and supply chain.
Some stock exchanges have already adopted sustainability listing requirements. Companies listed on the Johannesburg stock exchange must disclose sustainability information or explain why they do not.
Sweden requires all state-owned companies to report on corporate responsibility activities, and Denmark requires all listed companies to report on sustainability performance. Companies listed on the London Stock Exchange are required to report their annual emissions data as of April.