World Federation of Exchanges sets out ‘material ESG metrics’ for disclosure guidance

The World Federation of Exchanges, the global trade association for exchanges and clearing houses, has set out a series of material environmental, social and governance (ESG) metrics that its member exchanges can include in their disclosure guidance for listed firms.

It is the culmination of a year-long project by WFE’s Sustainability Working Group, which was established in 2014 and is chaired by Evan Harvey, director of corporate responsibility at Nasdaq. Members of the London-based WFE include leading exchange groups such as New York Stock Exchange parent Intercontinental Exchange. The federation represents 64 public stock, futures and options exchanges; more than 44,000 companies are listed on WFE member exchanges.

The federation presented the recommendations at its general assembly in Doha last month. The guidance, designed to be implemented by member exchanges on a voluntary basis, highlights 33 key performance indicators, including energy consumption, water management, CEO pay ratio, gender diversity, human rights, child and forced labour, temporary worker rate, corruption and anti-bribery, tax transparency in addition to other corporate policies. For those exchanges signed up to the UN’s Sustainable Stock Exchanges (SSE) initiative, the adoption of the WFE guidance is a way to meet their SSE commitments, the federation said.“The guidance provides exchanges which want it with practical advice on how to take their sustainability policies to the next level,” said
WFE CEO Nandini Sukumar, the former Bloomberg journalist who took over as CEO earlier this year.

The move was welcomed by Ceres, the US-based sustainability advocacy group. “While this initial guidance does not solve all environmental, social & governance (ESG) reporting challenges, it does take the capital markets in the right direction of more consistency, comparability and better quality information,” said Ceres’ President Mindy Lubber.

Separately, Nasdaq has announced that its Nordic exchanges in Stockholm, Helsinki, Copenhagen, Reykjavik, Tallinn, Riga and Vilnius have joined the Sustainable Stock Exchanges initiative, of which it was a founding partner exchange in 2012.

US fund management giant BlackRock recently called for greater sustainability leadership from global stock exchanges. Its global head of corporate governance and responsible investment Michelle Edkins wrote recently that leadership on ESG on the part of exchanges – and their regulators – would be welcomed.