(Helsinki, 4 November 2015) The Chair of the World Federation of Exchanges (WFE) Sustainability Working Group (SWG), Evan Harvey announced at the SSE Regional Dialogue in Helsinki earlier this month the release of new WFE recommendation on ESG reporting. The guidance recommends use of the SSE Model Guidance released in September. “As contributors to the UN SSE Model Guidance, we believe that every exchange should start with that document. It provides a cogent summary of the value drivers behind exchange advocacy for better ESG reporting,” the WFE recommendation reads.
The new WFE recommendation “offers practical advice on how to roll-out enhanced sustainability disclosure,” the WFE said in a press release. “In addition, for those exchanges signed up to the UN’s Sustainable Stock Exchanges initiative, the adoption of the WFE guidance is a way to meet their SSE commitment.”
“The guidance provides exchanges which want it with practical advice on how to take their sustainability policies to the next level and will help them meet the international sustainability benchmarks to which they are committed,” said WFE CEO Nandini Sukumar.
This voluntary set of recommendations and metrics adds to the momentum started by the SSE Model guidance. “Stock exchanges hold the key to change,” Mindy Lubber wrote in Forbes when the SSE Model Guidance was released. “The UN’s Model Guidance, and the collaborative efforts of investors, Ceres, PRI and other disclosure advocates, have the potential to trigger historic improvements in how global financial markets behave.”
The new WFE document builds on the SSE Model Guidance, which the WFE’s SWG also contributed to and for which the SWG Chair and Vice-Chair wrote the Foreword. The WFE and SSE guidance documents together form a practical toolkit for Stock Exchanges to help them guide both companies and investors on environmental, social and governance (ESG) reporting and measurement.
The WFE’s new recommendations sought to meet exchange’s demands for specific key performance indicators to measure performance in the ESG categories presented in the SSE Model Guidance. The work resulted in 33 indicators considered to be of utmost concern for exchanges.
Like the SSE Model Guidance, the WFE metrics and recommendations are a voluntary initiative for exchanges. The SSE encourages all stock exchanges to use these new tools to create their own guidance for listed companies on ESG reporting.
“We intend to use the UN SSE Model Guidance as a basis for discussions with both investors and issuers to determine our own guidance, which we expect to produce in the next year,” said London Stock Exchange and FTSE Russell executive Mark Makepeace. “We are also recommending to other exchanges to join us in introducing similar support for issuers in their markets. We call on investors to engage with exchanges, index providers and companies on how ESG information is and could be used in the investment process to ensure transparent and efficient disclosure of such data.”
To follow the SSE’s campaign to close the ESG reporting guidance gap, visit the website.
About the Sustainable Stock Exchanges (SSE) Initiative
The SSE is a peer-to-peer learning platform for exploring how exchanges—in collaboration with investors, regulators, and companies—can encourage sustainable investment and enhance corporate transparency, and ultimately performance, on ESG (environmental, social and corporate governance) issues. The SSE is convened by the UN Conference on Trade and Development (UNCTAD), the UN Global Compact, the UN Environment Program’s Finance Initiative (UNEP FI), and the Principles for Responsible Investment (PRI). All interested parties are encouraged to visit the SSE website (www.SSEinitiative.org) for more information on specific exchanges’ sustainability efforts and further opportunities to advance the integration of sustainability within capital markets.
About the WFE
The World Federation of Exchanges is the global trade association for exchanges and clearing houses. The WFE represents 64 public stock, futures and options exchanges, as well as CCPs, including those not affiliated with a single exchange. WFE promotes the development of fair, efficient and transparent markets. We work with policy makers, regulators and standard-setters around the world to support the development of effective rules and standards for exchanges and market participants.
Over 44,000 companies – representing a total market capitalisation of US $64 trillion, trading value of US $76 trillion and equivalent to more than 75% of global GDP – list on WFE member exchanges.