In February, the London Stock Exchange Group (LSEG) issued guidelines on how companies should incorporate environmental, social and governance (ESG) issues into disclosure statements alongside traditional financial reporting.
International stock exchanges and global asset managers are increasingly focused on companies' social and environmental impact. Issues including climate risks, labour and human rights, and transparency and have become key factors in making investment decisions. Business sustainability starts to demonstrate the rate of business success.
"The agenda isn't being driven by politics as much, it's being led by investors, particularly long-only investors," said Mark Makepeace, Chief Executive of FTSE Russell. "Of the biggest ten asset managers, seven used ESG in their investment approach", he said.
The LSEG has sent its guidelines to more than 2,700 companies listed on its UK and Italian exchanges. The guidelines are in line with the United Nations' Sustainable Stock Exchange Initiative, which the London exchange joined in May 2014, a forum which encourages companies to disclose information about their social and environmental impact.
European regulators have also put in place legislation that will require large companies to disclose ESG issues from this year onwards.
ESG reporting guide is available for download from LSEG website:
Source: Reuters
United Nations' Sustainable Stock Exchange Initiative: http://www.sseinitiative.org/