GRI recently released a report on why sustainability reporting is important for listed companies. At a recent event hosted by the Shangai Stock Exchange, they observed that all State Owned Enterprises in China must produce reports. As a result, China has seen a huge increasing in reporting in the private sector as well. The Shangai Stock Exchange recommends sustainability reporting to all listed companies and China’s economic plans continue to focus on environmental sustainability and disclosure.
There are over 100 stock exchanges in the world and GRI reckons that when major stock exchanges start paying attention to sustainability standards, more regulators will follow. It has always been known that there are many reasons for a company to start reporting, but now in order to get listed many exchanges demand a sustainability report. Both NYSE and NASDAQ in the US are acknowledging sustainability information.
Vice President and Head of CSR at NYSE, Michelle Greene commented on this trend saying: “Hopefully we’re heading toward a tipping point, where companies that don’t report have some explaining to do, rather than those that do being the exception.”
There are several stock exchanges that are working towards developing their own standards. NYSE has more than 8000 listed companies and they have recently published their second sustainability report. NYSE was also recognized in the Dow Jones Sustainability Index and the CDP’s S&P Leader Index.
In several other countries like Brazil, sustainability forms an important part of their national stock exchanges. They have developed a framework based on GRI for their sustainability reporting. German exchange Deutsche Börse also considers sustainability to be an important factor for listed companies. They have also released guidelines for investors to factor in sustainability performances. Singapore is taking the lead in Asia and the Singapore Stock Exchange encourages listed companies to start reporting their sustainability performance. In 2010, they issued their own guidelines that companies may use as a framework. The stock exchange of Thailand is now following suit with its own guidelines for listed companies.
Other major stock exchanges are looking into integrated reporting as an option. Integrated reporting incorporates sustainability performance into financial data. The Johannesburg Stock Exchange in South Africa has a ‘comply or explain’ policy for integrated reporting.
Stock exchanges can work with GRI by becoming Organizational Stakeholders. NYSE is one of the most notable stock exchange to do this. They can also get involved in development of new GRI guidelines as well as encourage listed companies to report through their own guidelines.
The insistence of sustainability standards by stock exchanges is a move that will increase the profile of CSR. It also indicates that non-financial risk reporting is fast gaining traction as a method of measuring financial success. This could spell a great future not only for sustainability but also for social entrepreneurs and investors.