Leading stock exchanges across the globe, including those in emerging markets, are increasingly at the forefront in developing sustainability initiatives. A report released today by EIRIS, a leading global provider of research into corporate environmental, social and governance (ESG) performance for investors, shares insights from stock exchanges on the implementation of such initiatives. Eleven stock exchanges were interviewed for the report, representing both established players and newcomers to sustainability. The report includes EIRIS’ recommendations to help stock exchanges realise effective sustainability initiatives in the future.
The report ‘Sustainability Initiatives: Insights from Stock Exchanges into Motivations and Challenges‘ identifies stock exchanges’ key motivations for developing sustainability initiatives, including:
- to improve the ESG performance of companies listed on their exchanges,
- to encourage and to help investors engage with companies on sustainability issues,
- to identify themselves in the marketplace as committed to sustainability and
- to draw on the latest research to support the link between long-term financial performance and ESG issues.
In the report stock exchanges share valuable insights for the benefit of their peers, including:
- advice on the benefits of getting senior management buy-in,
- improvements seen in company performance and
- opportunities opening up from research demonstrating a link between good ESG performance and long-term financial performance.
EIRIS works with a number of stock exchanges around the world, including the Johannesburg Stock Exchange, the Bolsa Mexicana de Valores and most recently the Borsa Istanbul. EIRIS provides data and analysis services to help stock exchanges develop, launch and grow sustainable indices, from defining criteria and collecting data, to developing and implementing new index rules, and engaging with companies and the investment community.
EIRIS gives the following key recommendations to stock exchanges:
- engage with companies and investors around the long-term benefits of driving better company performance on ESG issues, both for the benefit of these groups and for society as a whole
- engage with investors, particularly those from the mainstream, in order to identify the sustainability-focused products and services that exchanges can offer which would be of most value to investors
- explore ways of working together to overcome the challenges stock exchanges face
- work with national regulators to develop ESG-related listing rules, preferably on a ‘comply or explain’ basis
- encourage companies to provide audited ESG data
- draw on the latest research to support the link between long term financial performance and ESG issues
Sustainability initiatives and strong corporate ESG performance
The case study in the report finds a strong correlation between those markets with stock exchanges that have pioneered sustainability indices and strong corporate ESG performance. An analysis of the performance of the largest 300 emerging companies against EIRIS’ Global Sustainability Ratings product, delivered via the EIRIS Global Platform, found a markedly strong performance from both South African and Brazilian companies (both of which have stock exchanges with sustainability indices) and weaker ESG performance from companies in China and Russia.
Stephen Hine, Head of Responsible Investment Development at EIRIS, commented, “The insights shared by stock exchanges in this report are an excellent resource for other stock exchanges seeking to implement sustainability initiatives for the first time, or those trying to make existing initiatives more effective. Whilst there will be challenges, they are surmountable. Through their key position in the financial ecosystem stock exchanges can provide powerful encouragement to sustainability, and the benefits from their sustainability initiatives will be for companies, investors and society as a whole.”
For a pdf copy of this press release with notes to editors, please click here.
London: Stephen Hine | EIRIS | [email protected] |Tel: +44 (0)20 7840 5716