Investor Group Proposes ESG Disclosure Rules

by | May 13, 2013

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The Ceres-led Investor Network on Climate Risk has proposed that companies listed on US and global stock exchanges be required to include a series of environmental, social and governance sustainability disclosures in their annual financial filings.

The group of investors, which includes BlackRock, British Columbia Investment Management Corporation and the AFL-CIO Office of Investment, drafted a proposal that calls for companies to disclose an ESG materiality assessment process, a sustainability table of disclosures that would map the locations of ESG content in public documents, and ESG reporting on eight key issues.

The public comment period for the INCR Listing Standards Drafting Committee Consultation Paper: Proposed Sustainability Disclosure Listing Standard for Global Stock Exchanges ends May 30.

The investor group, along with NASDAQ OMX, say the consultation paper is an effort to develop a uniform standard that all stock exchanges can use.

The final document, once investors have provided feedback, will be submitted to stock exchanges for review and later for consideration at the World Federation of Exchanges annual meeting in October.

Earlier this month, both FTSE Group and Thomson Reuters launched ESG-related indices.

The Thomson Reuters Corporate Responsibility Indices were developed jointly with S-Network Global Indexes, a New York-based specialist index design firm. The firms say unlike the majority of ESG indices, their indices mirror the performance of major global benchmarks via companies that have substantially higher ESG ratings than the weighted average for such indices as the S&P 500 or MSCI EAFE.

FTSE Group’s environmental technologies index, FTSE ET100, is designed to measure the performance of companies whose core business is in the development and operation of environmental technologies.

To qualify, companies must derive at least 50 percent of their business from environmental markets. These include renewable and alternative energy, energy efficiency, water infrastructure and technology, waste management and technologies, pollution control and environmental support services, as defined by the FTSE environmental markets classification system.

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