A proposed standard will require companies to disclose sustainability information in order to be listed on global stock exchanges. The standard will require companies to explain the process used to determine material environmental and social issues, provide links to sustainability data in financial reporting, and disclose pertinent information related to climate change, environmental impact, human rights, supply chain, diversity, employee relations, government relations, and product impact and safety. According to Bloomberg News, the Ceres Investor Network on Climate risk, a group of influential investors including BlackRock, Rockefeller & Co., and Boston Common Asset Management, is developing the standard.
This standard will define a disclosure procedure for investors to determine ESG-related risks and opportunities and to encourage companies to develop responsible business practices.
Many stock exchanges have already adopted similar disclosure standards, for example the Johannesburg Stock Exchange and London Stock Exchange. The proposed standard will help create consistency in the type of ESG information shared by companies listed in exchanges around the world. In turn, this consistency will help investors to optimally allocate capital such that they can mitigate immediate risks while driving long-term value.
By Michael Shoemaker and Mark Christensen