Investors Propose Requiring Sustainability Data Disclosure

Photographer: Tomohiro Ohsumi/Bloomberg

A global sustainability listing standard would allow investors to compare companies on their environmental, social, and governance performance. Close

A global sustainability listing standard would allow investors to compare companies on... Read More

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Photographer: Tomohiro Ohsumi/Bloomberg

A global sustainability listing standard would allow investors to compare companies on their environmental, social, and governance performance.

Bloomberg BNA -- A group of investors April 8 proposed a standard requiring companies to disclose environmental and social data in annual financial filings in order to be listed on global stock exchanges.

A global sustainability listing standard would allow investors to compare companies on their environmental, social, and governance performance, Gwen Le Berre, vice president of corporate governance and responsible investment at BlackRock, said in a statement. BlackRock is one of the investment companies participating in the development of a sustainability listing standard.

The other investors working on the standard are Rockefeller & Co., Boston Common Asset Management, Pax World Management, Domini Social Investments, F&C Management Ltd., British Columbia Investment Management Corp., and the AFL-CIO Office of Investment. The investors are part of the Ceres Investor Network on Climate Risk.

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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.

Creating a standard for reporting across exchanges will encourage sound business practices and responsible investing, said Meyer Frucher, vice chairman at NASDAQ, in a statement April 8.

The coalition issued a consultation paper detailing the elements of the proposed standard. The group is seeking comments from investors on the paper by May 1.

The group will submit a final paper to stock exchanges for consideration at the World Federation of Exchanges annual meeting in October.

NASDAQ plans to work with investors to encourage the International Organization of Securities Commissions—the international association of securities regulators—to promote the adoption of a mandatory global standard, according to the paper. Frucher said in February that NASDAQ is also working with companies on an individual basis to encourage them to disclose their environmental and sustainability data.

Some Stock Exchanges Have Sustainability Requirements

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.

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