A report released today, “Sustainable Stock Exchanges: A Report on Progress”, has found that a majority of stock exchanges remain committed to promoting greater corporate responsibility on sustainability issues but are restricted in the actions they can take.
- Stock exchanges reaffirm responsibility to encourage corporates to report on sustainability issues, a reassuring sign ahead of Rio+20
- Global approach to consistent and material corporate sustainability reporting welcomed by many exchanges
- Ability to implement sustainability initiatives limited by reduced regulatory mandate and lack of clear revenue drivers
- Coordinated policy support and clearer, more supportive input from investors are necessary to build mainstream sustainable capital markets
A report released today, “Sustainable Stock Exchanges: A Report on Progress”, has found that a majority of stock exchanges remain committed to promoting greater corporate responsibility on sustainability issues but are restricted in the actions they can take.
The survey was first commissioned by Aviva Investors in 2010 as part of the Sustainable Stock Exchange Initiative*, and resulted in the report “Sustainable Stock Exchanges: Real Obstacles, Real Opportunities”**. Written by Responsible Research, today’s report seeks to capture the progress on promoting corporate sustainability by surveying 27 of the largest exchange entities across the world’s markets.
This report found that exchanges remain in agreement that they have a responsibility to encourage greater corporate responsibility with 76% acknowledging this compared to 71% in 2010.
The implementation of mechanisms to promote sustainability disclosure continues to be an issue for exchanges as they have found that in an increasingly global and competitive market and with a reduced regulatory function, there are limits to the actions they can take on sustainability. More than half indicated this remit was jointly shared with regulators and legislators (company law) with only two respondents considering the implementation of mechanisms to promote sustainability disclosure and accountability was solely within their remit. In about a third of markets this was deemed entirely the jurisdiction of regulators and legislators, suggesting that in order to encourage greater corporate responsibility on sustainability issues, policymakers and regulators should support the introduction of guiding principles to enhance ESG disclosure by companies in their markets.
More than three quarters of respondents (80%) also said they would welcome a global approach to consistent and material corporate sustainability reporting, suggesting a common framework may need to be built among policymakers at the global level.
While stock exchanges indicated that institutional investors were generally supportive of their sustainability initiatives, nearly half also cited investor ambivalence as a factor that discouraged them from further action. This suggests a threshold of investor support and dialogue that needs to be exceeded for true progress to be made.
Commenting on the findings of the report Paul Abberley, chief executive of Aviva Investors London, said: “Exchanges play a vital role in the move towards more sustainable capital markets as they have the opportunity to influence and monitor companies seeking to access equity markets. So it’s encouraging to see that they recognise this responsibility although it is disappointing that so many failed to consider the implementation of mechanisms to promote sustainability disclosure through changes to listing rules.
“However we recognise that exchanges can’t achieve this on their own and it is not solely their responsibility. They require further support from asset owners and asset managers - as well as their regulators and legislators. This is why we have convened the Corporate Sustainability Reporting Coalition. We are collectively urging all nations at the United Nations Conference on Sustainable Development in June - Rio+20 - to commit to develop a Convention requiring on a report or explain basis the integration of material sustainability issues within the report and accounts of all listed and large private companies. It’s encouraging to see that the majority of exchanges appear to welcome such an approach.”
Lucy Carmody, executive director and editor of the report, from Responsible Research added: “The report’s findings suggest that while most stock exchanges understand and support the need for greater corporate action on sustainability, enhanced regulatory and other stakeholder support will be needed to help them move forward within the Sustainable Stock Exchanges Initiative.
“Additionally, the survey found an increase in the number of exchanges agreeing that strong sustainability requirements for listed companies made good business sense (38% 2010 / 57% in 2012) but they pointed out that sustainability initiatives and products do not contribute significantly to their revenues. Some exchanges also pointed out that investors’ demonstrable integration of ESG aspects in their decision-making would strongly support their sustainability initiatives. Based on the report’s findings, emerging market exchanges were more inclined to view ESG credentials as a competitive differentiator and reputation-enhancing factor.”
Further information about the Sustainable Stock Exchange Initiative
* About the Sustainable Stock Exchange Initiative
Named by Forbes magazine as one of the "World's Best Sustainability Ideas" and a finalist for the 2011 Katerva Sustainability Award, the Sustainable Stock Exchanges (SSE) initiative is aimed at exploring how exchanges can work together with investors, regulators, and companies to enhance corporate transparency, and ultimately performance on ESG (environmental, social and corporate governance) issues.
The SSE initiative is a joint project organised by the United Nations-backed Principles for Responsible Investment (PRI), the United Nations Conference on Trade and Development (UNCTAD), the United Nations Environment Programme Finance Initiative (UNEP-FI), the United Nations Global Compact (UNGC) and Aviva Investors. In November 2009, the first SSE dialogue was launched by UN Secretary General Ban Ki Moon in New York and featured approximately 100 leaders from institutional investors, stock exchanges and regulatory bodies.
To learn more about the SSE initiative, please visit: www.SSEinitiative.org
** About Sustainable Stock Exchanges: A Report on Progress
Sustainable Stock Exchanges: A Report on Progress was written and researched by Singapore-based independent research provider Responsible Research with financial support from Aviva Investors. It was produced in collaboration with United Nations-backed Principles for Responsible Investment (PRI), the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Global Compact (UNGC), as part of the global Sustainable Stock Exchange Initiative.
It is a follow-up to the 2010 report Sustainable Stock Exchanges: Real Obstacles, Real Opportunities, which was also written by Responsible Research with support from Aviva Investors. Sustainable Stock Exchanges: Real Obstacles, Real Opportunities was recently shortlisted for the 2011/12 Farsight Award. Like its predecessor, A Report on Progress bases its findings on a survey of global stock exchange entities, as well as interviews with market experts, representatives of stock exchanges and investor groups.
The full report is available for download here: www.responsibleresearch.com/.
About Responsible Research
Responsible Research is an independent research provider covering Asian and other key emerging markets. We focus on analysis of environmental, social and governance (ESG) factors across a broad range of listed companies, sectors and industries. Since 2009, when Responsible Research was established, we have built a strong reputation among asset managers and owners, who use our award-winning ESG analysis to identify both risks to earnings and new opportunities for investment.
To find out more, please email us at: info@responsibleresearch.com
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For more information contact:
Laura Cocker
Corporate Affairs
Telephone: +44 (0)20 7809 8452
Notes to editors:
Aviva Investors
Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 17 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of £263 billion at 30 December 2011.
Aviva plc
Aviva provides 43 million customers with insurance, savings and investment products.
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