The London Stock Exchange (LSE) Group today announced that it will partner with the United Nations Sustainable Stock Exchanges (SSE) initiative, joining nine other exchanges in the US, Europe, Africa and Asia to promote sustainable business practices among publicly listed companies worldwide.
In a letter to UN Secretary General Ban Ki-moon, the LSE Group committed to working with investors, companies and regulators to promote long term sustainable investment and improved environmental, social and corporate governance (ESG) disclosure and performance among companies listed on its exchanges.
“London Stock Exchange Group’s approach to corporate responsibility is founded on four pillars that are closely tied with how we operate as a business: our markets, our services, our people, and our community,” said Mark Makepeace, Group Director of Information Services, LSE Group. “Given our role at the heart of global financial markets, we are in a unique and privileged position to promote sustainability and corporate responsibility. Ultimately this is about supporting stable global long-term economic growth. We are therefore delighted to join the UN SSE initiative as a Partner Exchange and look forward to collaborating on important sustainability themes with the UN and peer exchanges around the world.”
The announcement was made as UN officials participated in the market opening at the LSE today, where they welcomed LSE Group to the SSE. “By joining the United Nations Sustainable Stock Exchanges initiative today, the London Stock Exchange commits to a renewed effort to engage in dialogue with key capital market stakeholders to raise the level of best practice,” said UNCTAD Secretary-General Mukhisa Kituyi. “Together, we can promote markets where market signals and sustainability priorities are in alignment, not conflict. This is part of our vision for a sustainable future. This will be a key element for promoting much-needed investment in sustainable development.”
“Stock exchanges have a crucial role to play in enhancing both the quality and quantity of environmental, social and corporate governance reporting by companies listed on their exchanges, and we are pleased to welcome the London Stock Exchange to the UN SSE initiative,” said Fiona Reynolds, Managing Director, Principles for Responsible Investment. “Only 3 percent of the world’s largest companies currently disclose information about their ESG performance. Better disclosure will improve the usefulness and comparability of information being reported in each market, enabling institutional investors to better manage risk and make more informed investment decisions.”
“By looking at the materiality of sustainability and valuing environmental, social and governance factors, mainstream investors are increasingly becoming key leverage points and are driving companies to act,” saidGeorg Kell, UN Global Compact Executive Director.
“The Sustainable Stock Exchanges initiative is delivering the message that stock exchanges are a critical player in bringing investors, companies, regulators and other key stakeholders together to help make corporate sustainability a transformative force in achieving a shared, secure and sustainable future.”
“As the old adage goes, you get what you measure. The disclosure of relevant ESG information and transparency over sustainability strategies, risks and opportunities is crucial for companies to manage environmental and social risks and for investors to be able to assess these factors,” said Charles Anderson, Director of the UNEP Finance Initiative. “The London Stock Exchange is committing today to working with companies, investors and regulators to design more transparent and sustainable capital markets. We believe their engagement will enable asset owners and asset managers to use their influence to direct capital and send positive market signals to those companies that exhibit best sustainability practices.”
“We warmly welcome the participation of the London Stock Exchange in the United Nations Sustainable Stock Exchange initiative, which continues to go from strength-to-strength,” said Steve Waygood, Chief Responsible Investment Officer, Aviva Investors. “As long term investors, we are concerned with valuing companies accurately. We believe that business performance on non-financial environmental, social and corporate governance issues are often material to company valuation. However, it is frequently difficult to gain access to this information. Today’s announcement should help the London Stock Exchange maintain its top quartile performance in this fast moving area.”
Nine other exchanges have joined the UN SSE since it was launched in 2009: NYSE Euronext, NASDAQ OMX, Borsa Istanbul, BM&FBBovespa (Brazil), the Bombay Stock Exchange, the Egyptian Exchange, the Johannesburg Exchange, the Nigerian Stock Exchange and the Warsaw Stock Exchange. The Initiative is co-organized by UNCTAD, the United Nations Global Compact (UNGC), the United Nations Environment Programme Finance Initiative (UNEP FI), and the UN-supported Principles for Responsible Investment (PRI). For more information, please visit www.SSEinitiative.org.
The announcement comes as momentum builds among investors and stock exchanges to promote corporate sustainability disclosure that is consistent and comparable across markets. A group of institutional investors, including members of Ceres’ Investor Network on Climate Risk (INCR) and signatories to the PRI, is currently calling for comments on a list of recommendations to the World Federation of Exchanges (WFE). The proposal and recommendations will be reviewed by the WFE’s newly formed Sustainability Working Group and presented at the WFE Annual Meeting in Korea later this year. Members of the UN SSE initiative will meet in Geneva on 14 October for their biennial Global Dialogue: five party talks between exchanges, investors, companies, regulators and policy makers. The Global Dialogue takes place as part of UNCTAD’s 4th World Investment Forum, which will be opened by UN Secretary-General Ban Ki-moon.