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BlackRock, NASDAQ back call for uniform sustainability exchange listing standard

Momentum builds for uniform ESG requirements for companies

A group of major investment industry names including BlackRock, the world’s largest asset manager, and exchange group NASDAQ, have called for a uniform sustainability standard that can be used across global stock exchanges.

Other institutions backing a draft consultation paper include Canada’s British Columbia Investment Management Corporation, and the US labour union-linked AFLCIO Office of Investment.

The group is being coordinated by the Investor Network on Climate Risk (INCR), the coalition of more than 100 investors with more than $11trn in combined assets that is part of US sustainability advocacy group Ceres.

“We believe that this proposed listing standard strikes a good balance between investors’ need for consistent and comparable ESG [environmental, social and governance] information, and companies’ need for flexibility,” said Gwen Le Berre, vice president of corporate governance and responsible investment at BlackRock, the fund giant with $3.8trn under management. “Stock exchanges can play a leadership role in moving ESG disclosure practices forward.”
A corporate sustainability reporting standard across all exchanges would “encourage a shift in how companies assess the importance of their efforts in environmental, social and governance issues,” added NASDAQ Vice Chairman Meyer Frucher. It was a “win-win” for both companies and investors – encouraging sound business practices and responsible investing.
The group is seeking comment from investors globally on their proposal. The initial consultation period on their new white paper runs until May 1. The final document will be submitted to stock exchanges for consideration at the World Federation of Exchanges annual meeting in October.NASDAQ and four other exchanges announced a formal commitment to promote long-term, sustainable investment and improved ESG disclosure at the Sustainable Stock Exchanges Global Dialogue in Brazil in summer 2012. The other bourses were Brazil’s BM&FBOVESPA, the Johannesburg Stock Exchange, the Istanbul Stock Exchange and the Egyptian Exchange.

“Investors are increasingly frustrated by the lack of sustainability disclosure across markets, and how inconsistent that data is even within the same industry,” said INCR director and Ceres president Mindy Lubber.

The paper calls for a series of disclosures by companies as part of a listing standard, including:

  • Materiality assessment: An assessment in annual financial filings where management will discuss the approach for determining material ESG issues.
  • Sustainability table of disclosures: Links in filings to a Global Reporting Initiative (GRI) Content Index.
  • Improved corporate ESG disclosure: Companies must provide reporting on a “comply or explain” basis for eight key ESG categories.

Investors on the INCR Listing Standards Drafting Committee:

  • Robin Brown/ Farha-Joyce Haboucha, Rockefeller & Co.
  • Lauren Compere, Boston Common Asset Management
  • Julie Fox Gorte, Pax World Management
  • Adam Kanzer, Domini Social Investments
  • Gwen Le Berre, BlackRock
  • Karina Litvack, independent consultant (ex-F&C)
  • Barb MacDonald, British Columbia Investment Management Corporation
  • Rob McGarrah, AFLCIO
  • Dawn Wolfe, F&C Management