Tag Archives: Louis D. Coppola

Expanding Public Debates About the “What” & “How” of Corporate ESG Disclosure

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by Hank Boerner – Chair & Chief Strategist – G&A Institute

March 2, 2021

Corporate sustainability / ESG reporting — What to disclose? How to frame the disclosures (context matters!)? What frameworks or standards to use?  Questions, questions, and more questions for corporate managers to consider as ESG disclosures steadily expand.

We are tuning in now to many more lively discussions going on about corporate ESG / sustainability et al public disclosures and structured reporting practices — and the growing complexity of all this disclosure effort, resulting often in disclosure fatigue for corporate practitioners!

Corporate managers ponder the important question:  which of the growing number of ESG frameworks or standards to use for disclosures? (The World Economic Forum (WEF) describes some 600 ESG guidelines, 600 reporting frameworks and 360 accounting standards that companies could use for reporting.  These do vary in scope, quantity, and quality of metrics.)

In deciding the what and how for their reporting, public companies consider then the specifics of relevant metrics and the all-important accompanying narrative to be shared to meet users’ rising information needs…in this era of emergent “stakeholder capitalism”.

Of course, there is the question for most companies of which or what existing or anticipated public sector reporting mandates will have to be met in various geographies, for various sectors and industries, for which stakeholders.

We here questions such as — how to get ahead of anticipated mandates in the United States if the Securities & Exchange Commission (SEC) does move ahead with adoption of new rules or at least strong guidance for corporate (and investor) sustainability reporting.

The European Union is today ahead in this area, but we can reasonably expect the USA to make important moves in the “Biden Climate Administration” era.  (The accounting standards boards are important players here as well as regulatory agencies in the sovereign states.)

Company boards, executive committees, professional staff, sustainability team managers wrestle with this complex environmental (for ESG disclosure) as their enterprises develop strategies, organize data flows, set in place data measurement protocols, and assemble the ESG-related content for public disclosure. (And, for expanded “private sharing” with ESG ratings agencies, credit risk agencies, benchmark/index managers, to meet customer ESG data requests, and more).

The list of issues and topics of “what” to disclose is constantly expanding, especially as institutional investors (asset owners and their managers) develop their “asks” of companies.

Climate change topics disclosure is at the top of most investor lists for 2021. Human Capital Management issues have been steadily rising in importance as the COVID-19 pandemic (and spread of variants) affects many business enterprises around the globe.

In the USA, SEC has new guidance for corporate HCM disclosures.  Political unrest is an issue for companies.  Anti-corruption measures are being closely examined.

Diversity & Inclusion (including in the board room and C-suite) is growing in importance to investors.

Also, physical risk to corporate assets in the era of superstorms and changing weather patterns – what are companies examining and then reporting on?  Exec compensation with metrics tied to performance in ESG issues is an area of growing interest.

We are monitoring and/or involved in multiple discussions and organized initiatives in the quest to develop more global, uniform, comparable, reliable, timely, complete, and assured corporate sustainability metrics, and accompanying narrative.  And, to provide the all-important context (of reported data) – what does the data mean?  It’s a complicated journey for all involved!

This week we devote the content of this week’s Highlights newsletter to various elements of the public discussions about the many aspects of the journey.

Here at G&A Institute, our team’s recommended best practice:  use multiple frameworks & standards that are relevant to the business and meet user needs; these are typically then disclosed in hybridized report where multiple standards are harmonized and customized for the relevant industries and sectors of the specific company’s operations and reflect the progress (or even lack of) of the enterprise toward leadership in sustainability matters.

This approach helps to reduce disclosure fatigue for internal corporate teams challenged to choose “which” framework or standard and the gathering of data and other content for this year’s and next year’s ESG disclosures.

We shared our thoughts in a special issue of NIRI IR Update, published by the National Investor Relations Institute, the important organization for corporate investor relations officers:


Here are our top selections in the content silos for this week that reflect the complexity of even the public debates about corporate ESG disclosure and where we are in early-2021.

TOP STORIES

The ever-evolving world of ESG investing from a few different points of view. What are the providers of capital examining today for their portfolio or investable product decision-making?  Here are some shared perspectives:

The UN Sustainable Development Goals -– “What Matters” For 40 Sectors? G&A Institute’s Research Project Yields Key Data

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by Hank Boerner – G&A Institute Chair & Chief Strategist

  • An examination of materiality decisions made by 1,387 corporations in their sustainability / ESG reports on all 91 GRI G4 Specific Standard Disclosures, linked SDG Targets, and GRI Standards Disclosures 
  • Forty individual sector reports including the “Top GRI Indicators / Disclosures” and “Top SDG Targets” rankings for each sector are available for download at https://www.ga-institute.com/SDGsWhatMatters2018

Nearing the end of the 20th Century, the United Nations assembled experts to develop the eight Millennium Goals (the MDGs), to serve as blueprints and guides for public, private and social sector actions during the period 2000-2015 (the “new millennium”).

For “post-2015”, the more ambitious Sustainable Development Goals (the now familiar SDGs) were launched with 17 goals and 169 targets.

These are calls to action for rich and poor and middle-income nations from 2015 out to the year 2030.  These ambitious efforts are focused on such societal issues as improving education and health; social protection; providing job opportunities; and encouraging greater environmental protection (global climate change clearly in focus!).

The 17 SDGs are numbered for themes – “No Poverty” is Goal #1; “Clean Water and Sanitation” is Goal #6; Gender Equality is Goal #5.

As the goals were announced after an exhaustive development process (ending in 2015), sovereign nations, regions, communities, corporations, academic institutions, and other societal stakeholders began “adopting” and embracing the goals, and developing action plans and programs related to the goals.

Numerous companies found (and are finding today) that the goals aligned with the long-term corporate strategies (and vice versa).

SDG strategies were and are being amended to align the goals with critical corporate strategies; actions and programs were formulated; partnerships were sought (corporate with government and/or social sector partners and so on).  And the disclosures about all of this began to appear in corporate and institutional GRI sustainability reports.

In the months following official launch, a wave of corporations began a more public discussion of the SDGs and their adoption of specific goals – those that were material in some way to the company’s strategies, operations, culture, stakeholders, geography…and other factors and characteristics.

As the SDGs were “adopted” and embraced, companies began quickly to examine the materiality of the SDGs relative to their businesses and the first disclosures were appearing in corporate sustainability reports.

To rank the materiality of the SDGs for 40 different sectors, the G&A Institute analyst team gathered 1,387 corporate GRI G4 Sustainability / ESG reports and examined the disclosure level of each on 91 Topic Specific Standard Disclosures.  The database of the reporters materiality decisions around GRI Indicators were then linked to the 169 SDG targets using the SDG Compass Business Indicators table.

The sectors include Electricity, Beverages, Banks, Life Insurance, Media, and many more classifications (the list is available on the G&A web platform with selections to examine highlights of the research for each sector).

The results:  we now have available for you 40 separate sector report highlights containing rankings of the SDG Targets’ and the GRI G4 Indicators & GRI Standards Disclosures for each sector which can be downloaded here:  https://www.ga-institute.com/SDGsWhatMatters2018

The research results are an excellent starting point for discussion and planning, a foundation for determining sector-specific materiality of the SDGs and the GRI KPIs and disclosures as seen through the lens of these 1,387 corporate reporters across 40 sectors.

This is all part of the G&A Institute’s “Sustainability Big Data” approach to understanding and capturing the value-added corporate data sets for disclosure and reporting.  The complete database of results is maintained by G&A Institute and is used for assisting corporate clients and other stakeholders in understanding relevant materiality trends.
We welcome your questions and feedback on the year-long research effort.

Thanks to our outstanding research team who conducted the intensive research: Team Research Leaders Elizabeth Peterson, Juliet Russell, Alan Stautz and Alvis Yuen.  Researchers Amanda Hoster, Laura Malo, Matthew Novak, Yangshengjing “UB” Qiu, Sara Rosner, Shraddha Sawant, and Qier “Cher” Xue. The project was architected and conducted under the direction of Louis Coppola, Co-Founder of G&A Institute.

There’s more information for you at: https://www.ga-institute.com/SDGsWhatMatters2018

More information on the SDGs is at: https://www.un.org/sustainabledevelopment/

Contact G&A Institute EVP Louis Coppola for information about how G&A can help your company with SDGs alignment at:  lcoppola@ga-institute.com

G&A Institute Research Results: 85% of the S&P 500® Index Companies Published Sustainability / Responsibility / CR / Citizenship Reports in 2017

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By Hank Boerner – Chair and Chief Strategist, G&A Institute

One of the world’s most important benchmarks for equity investors is the S&P 500 Index®, a proprietary market-value weighted “basket” of the top stocks that represent about 80% of the U.S. equity markets according to the index owner, S&P Dow Jones Indices/McGraw Hill Financial.

Market Clout:  There are about US$8 trillion in Assets Under Management benchmarked to the index  – companies included in the index have a market-cap of US$6 billion or more (ticker:SPX).

More than six years ago the G&A Institute team decided to focus on the companies in the index to determine their level of (or lack of) ESG / Sustainability / CR / Citizenship disclosure and reporting.

Our first look-see was for year 2011 corporate reporting activities and after scouring the known sources  — each of the corporate websites, IR reports, printed reports, search engines results, connecting with companies and more —  we found just about 20% or about 100 of the large-cap index 500 companies were doing “something” along the lines of what we can describe today as structured reporting.  There were numerous brochure-type publications that did not qualify as a structured report of value to investors and stakeholders.

The GRI Was a Favored Framework – Then and Now
A good number of the early reporting companies were following the Global Reporting Initiative (GRI) framework for reporting guidance (that was for G3 and G3.1 at the time), and some perhaps had some other form of reporting (such as publishing key ESG performance indicators on their website or in print format for stakeholders); GRI’s G4 was later embraced by the 500.  And now we move on to the GRI Standards, which we are tracking for 2018 reporting by the 500.

This initial research effort was a good bit of work for our analyst team because many of the companies simply did not announce or publicize the availability of their sustainability et al report. (Some still do not announce, even in 2017 and 2018!)

The response to our first survey (we announced the results in spring 2012) was very encouraging and other organizations began to refer to and to help publicize the results for stakeholders.

We were pleased that among the organizations recognizing the importance of the work was the GRI; we were invited to be the data partner for the United States, and then the United Kingdom and the Republic of Ireland.  That comprehensive work continues and is complementary to the examination of the 500.

The 2011 Research Effort – Looking Back, The Tipping Point for Sustainability Reporting

Looking back, we can see that the research results were early indications of what was going on in the corporate and investment communities, as more asset owners and managers were adopting ESG / sustainability approaches, investment policies, engagement programs — and urging more public company managements to get going on expanded disclosure beyond the usual mandated financials (the “tangibles” of that day).

Turns out that we were at an important tipping point in corporate disclosure.

Investor expectations were important considerations for C-suite and board, and there was peer pressure as well within industries and sectors, as the big bold names in Corporate America looked left and right and saw other firms moving ahead with their enhanced disclosure practices.

And there was pressure from the purchasing side – key customers were asking their corporate supply chain partners for information about their ESG policies and practices, and for reports on same.  There was an exponential effect; companies within the 500 were, in fact, asking each other for such reports on their progress!

We created a number of unique resources and tools to help guide the annual research effort.  Seeing the characteristics and best practices of sustainability reporting by America’s largest and for the most part best-known companies we constantly expanded our “Sustainability Big Data” resources and made the decision to closely track S&P 500 companies’ public reporting — and feed the rich resulting data yield into our databases and widely share top-line results (our “Flash Report”).

The following year (2013) we tracked the 500 companies’ year 2012 reporting activities – and found a very encouraging trend that rang a bell with our sustainable investing colleagues:  a bit more than half of the 500 were now publishing sustainability et al reports.  Then in 2013, the numbers increased again to 72%…then 75%…then 81%…and now for 2017, we reached the 85% level.  The dramatic rise is clearly evident in this chart:

Note that there are minor annual adjustments in the composition of the S&P 500 Index by the owners, and we account for this in our research, moving companies in and out of the research effort as needed.

Louis Coppola, EVP of G&A Institute who designs and manages the analysis, notes:  “Entering 2018, just 15% of the S&P 500 declined to publish sustainability reports. The practice of sustainability reporting by the super-majority of the 500 companies is holding steady with minor increases year after year. One of the most powerful driving forces behind the rise in reporting is an increasing demand from all categories of investors for material, relevant, comparable, accurate and actionable ESG disclosure from companies they invest in, or might consider for their portfolio.

“Mainstream investors are constantly searching for larger returns and have come to the conclusion that a company that considers their material Environmental, Social, and Governance opportunities and risks in their long-term strategies will outperform and outcompete those firms that do not. It’s just a matter now of following the money.”

Does embracing corporate sustainability in any way impact negatively on the market performance of these large companies?  Well, we should point out that the annual return for the SPX was 22% through 12-13-18.   You can read more in our Flash Report here.

Thank you to our wonderful analyst team members who over the years have participated in this exhaustive search and databasing effort.   We begin our thank you’s to Dr. Michelle Thompson, D.Env, now a postdoc fellow supporting the U.S. Department of Energy in the Office of Energy Policy Systems Analysis; and her colleague, Natalia Valencia, who is now Senior Research Analyst at LAVCA (Latin American Venture Capital Association).  Their early work was a foundational firming up of the years of research to follow.

Kudos to our G&A Research Team for their significant contributions to this year’s research report:  Team Leader Elizabeth Peterson; analyst-interns Amanda Hoster, Matthew Novak, Yangshengling “UB” Qui, Sara Rossner, Shraddha Sawant, Alan Stautz, Laura Malo Yague, and Qier “Cher” Zue.

We include here a hearty shout out to the outstanding analyst-interns who have made great contributions to these research efforts in each year since the start of the first project back in 2011-2012.  It’s wonderful working with all of these future leaders!

The reports from prior years are posted on the G&A Institute website: https://www.ga-institute.com/research-reports/research-reports-list.html

Check out our Honor Roll there for the full roster of all of the talented analysts who have worked on these reports and numerous other G&A Institute research that we broadly share with you when the results are in.  Their profiles (which we work with our valued colleagues to keep up to date as they move on to great success in their careers) are on the G&A website: https://www.ga-institute.com/about-the-institute/the-honor-roll.html

Footnote:  As we examine 1,500 corporate and institutional reports each year we see a variety of titles applied:  Corporate Sustainability; Corporate Social Responsibility; Corporate Responsibility; Corporate Citizenship (one of the older titles still used by GE and other firms); Corporate Stewardship; Environmental Sustainability…and more!

If you would like to have information about G&A Institute research efforts, please connect with us via our website.

The Most Trustworthy Business and Professional Leaders – the Rosters Are Out Today From Trust Across America / Trust Around the World

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January 30, 2018
by Hank Boerner – Chair& Chief Strategist, G&A Institute

Trust!  For many of us, when a critical incident or crisis occurs, one of the first words that come to mind is “trust,” as in “they really broke the trust with us” or “the organization can’t be trusted” (as in the statements made) or “the leaders can’t be trusted.”

Apply this to now-familiar settings:  Wells Fargo bankers and the security of your personal bank accounts.  BP and deepwater ocean drilling or Alaska drilling.  Equifax and your personal financial information.  Valeant pharma and drug pricing – and alleged gouging.

In a world of those little swirling computer screen circles, and IT dominating our business & persona lives…threats can now be everywhere — internet hacking and phishing abounds – and we think:  who can we trust with your information?  That becomes a conscious and subconscious thought process on both a business and personal basis for many of us.

In business and professional life, trust is a valuable and precious commodity.  Warren Buffett has observed, “…it takes 20 years to build a reputation and five minutes to ruin it…if you think about that, you will do things differently…”

“Trustworthy” is a very valuable characteristic, we would say!

And so does an organization that has been identifying the “Top Thought Leaders in Trust” think that way:  the Trust Across America / Trust Around the World (TAA/TAW, owned by Next Decade, Inc.)

The founder and guiding spirit is CEO Barbara Brooks Kimmel, who 10 years ago created the program and its proprietary FACTS® Framework (used to measure the trustworthiness of more than 1,500 U.S. public companies). FACTS incorporates five indicators of trust and integrity – Financial stability, Accounting conservativeness, Corporate governance, Transparency and Sustainability.

Barbara is also the editor of the Trust INC. book series and runs the global Trust Alliance.

Every year since 2008, TAA/TAW assembles judges and conducts a survey and analysis to select a small universe of the Top Thought Leaders in Trust.  After five continuous years on the annual list, a small number of awardees receive the Lifetime Achievement Award.  This year’s lifetime roster additions include:

  • John Baldoni – President, the Baldoni Consulting organization.
  • Donna Boehme – Principal of Compliance Strategists LLC.
  • Doug Conant – former CEO of Campbell Soup and founder, Conant Leadership.
  • Robert Easton – Chairman and Senior Manager of Accenture Australia and New Zealand.
  • Mark S. Fernandes – CEO of Capitalism 2.0, Inc.
  • Barbara Brooks Kimmel – CEO of Trust Across America.
  • Holly Latty-Mann – Licensed Clinical Psychologist, Cofounder, and President of The Leadership Trust.
  • David Reiling – CEO of Sunrise Banks and social entrepreneur.

TAA / TAW is the leading global program devoted to researching and building tools to elevate organizational trust. A Google search will return over 1300 entries.

In 2015, the organization added the “Lifetime Honorees” designation to 12 professionals.  I was honored to be one of the original twelve, after five years of being the awardee for the annual award.  In 2016 and in 2017, seven more professionals were added to the roster (each year), and now in 2018, there are eight professionals added.

Ninety-one individuals were named to the 2017 individual award, including for the second year in a row, G&A Institute Co-founder and Executive Vice President Louis D. Coppola.

You can see the full list in the latest TRUST! Magazine here:  http://trustacrossamerica.com/magazine.shtml

 

Of course, Lou and I are humbled and proud to receive such honors.

TAA / TAW points to the organization’s core values and principles, which are excellent “north stars” for professionals’ and their organizations’ guidance:

Integrity – Quality – Community – Objectivity – Credibility – Success. 

You can learn more about these and the organization at: http://www.trustacrossamerica.com/about-words.shtml

Do you have a nominee for the Top Thought Leaders 2019 award?  The nominations are now open – there’s information at: http://www.trustacrossamerica.com/cgi-bin/nominations.cgi

# # #

Adding my thoughts….

Trust – this apparently comes down to us for common understanding and use from ancient languages.  There are derivations from the Old Norse – the language of the wandering Vikings (“traust” and “trow”).  From the Old Dutch (“troosten”).  And the German or Teutonic tongue (“trosten”).  And more from the Gothic English-the Anglo Saxon roots of spoken English today (“trausti”).

These ancient and current tongues convey to us:  

Truth.  Comfort. Trustworthy.
An agreement or covenant – to be true to one’s words and deeds.
To be believed.

And therefore – to be trusted and trustworthy.  Worth striving for, we would say in these often chaotic days of the 21st Century!

# # #

There’s information on the 2017 awards in the news from TAA:  https://www.prnewswire.com/news-releases/announcing-2018-top-thought-leaders-in-trust-300589490.html

Does the Draft EU Directive for Mandatory Sustainability Reporting Apply to US Companies? AND – Stock Exchanges Move One Big Step Closer Towards GLOBAL Mandatory Reporting As Well

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By Louis D Coppola @ G&A Institute..

I received an overwhelming response to the post on March 17, 2014 concerning the European Unions moves to make Sustainability / CSR reporting mandatory.  For those of you that have not read my original post you can take a look here:

https://ga-institute.com/Sustainability-Update//2014/03/17/european-union-moves-closer-to-make-sustainability-csr-reporting-mandatory-in-all-28-member-countries/

A question that came up a lot was whether or not this would apply to US companies operating in the European Union with more than 500 employees.  This is a great question and although I had heard through the grapevine that it would apply, I did not feel certain enough to state that fact because I could not find an official statement or clause that I had found in draft directives.  I had only heard this from other practitioners, in other articles etc that it would impact US companies.

Then I received an email from Carly Greenberg and Tim Smith at Boston Trust thanking me for the post, and calling my post “informative”.  I am very fond of Tim Smith and a real fan of his tremendous work in driving SRI over his entire 40+ year career with ICCR and now with Walden Asset Management – I sometimes refer to him as one of the Godfathers (Hey – I’m Italian and from NY so.. forgive me )  of SRI so I was very humbled to get this email and I knew that I had to find the answer to this question.  I consider myself lucky that over my relatively short career in Sustainability (14 years) Tim and I have crossed paths, shared panels, and discussed issues in some depth.  He has truly impacted the field more than almost anyone (and continues to today), and has impacted my career / thoughts etc dramatically.  (Thanks Tim!)

EUREKA! – I did find the copy of the draft directive itself and after reading through it with a fine toothed comb I came across a clause which I believe to be the smoking gun which was under section 3 “LEGAL ELEMENTS OF THE PROPOSAL” (the bold part is the important part):

The Accounting Directives regulate the information provided in the financial statements of all limited liability companies which are incorporated under the law of a Member State or European Economic Area (EEA). As Article 4(5) of the Transparency Directive refers to Article 46 of the Fourth Directive and to Article 36 of the Seventh Directive, the amendements proposed to these provisions will also cover companies listed on EU regulated markets even if they are registered in a third country.

Based on this clause, any company that trades on at least one of the many stock exchanges in the European Union (most global companies) which you can see in this list taken from a Wikipedia article number over 100+:

Economy Exchange Location Founded Listings Link
European Union European Union Euronext Amsterdam 2000 1154 Euronext
GXG Markets Horsens 1998 GXG
Albania Albania Tirana Stock Exchange Tirana 1996 TSE
Armenia Armenia Armenian Stock Exchange Yerevan 2001 12 NASDAQ OMX Armenia
Austria Austria Vienna Stock Exchange Vienna 1771 99 WB
Azerbaijan Azerbaijan Baku Stock Exchange Baku 2000 BFB
Belarus Belarus Belarus Currency and Stock Exchange Minsk 1998 BVFB
Belgium Belgium Euronext Brussels Brussels 1801 213
Bosnia and Herzegovina Bosnia and Herzegovina
– Bosnia and HerzegovinaFederation of Bosnia and Herzegovina Sarajevo Stock Exchange Sarajevo 2001 SASE
– Republika Srpska Republika Srpska Banja Luka Stock Exchange Banja Luka 2001 BB
Bulgaria Bulgaria Bulgarian Stock Exchange Sofia 1914 BFB
GuernseyJerseyChannel Islands Channel Islands Stock Exchange Guernsey 1987 1000 CISX
Croatia Croatia Zagreb Stock Exchange Zagreb 1991 ZB
Cyprus Cyprus Cyprus Stock Exchange Nicosia 1996 HAK
Czech Republic Czech Republic Prague Stock Exchange Prague 1861 29 PX
Denmark Denmark Copenhagen Stock Exchange Copenhagen 1620 172 OMX Nordic Market
GXG Markets Horsens 1998 GXG Markets
Estonia Estonia Tallinn Stock Exchange Tallinn 1920 OMX Baltic Market
Faroe Islands Faroe Islands Faroese Securities Market Tórshavn 2004 VMF
Finland Finland Helsinki Stock Exchange Helsinki 1912 130 OMX Nordic Market
France France Euronext Paris Paris 1724 1301 Euronext Paris
MATIF Paris 1986 MATIF (Euronext)
Georgia (country) Georgia Georgian Stock Exchange Tbilisi 1999 261 SSB
Germany Germany Berliner Börse Berlin 1685 Börse Berlin
Börsen Hamburg und Hannover Hamburg/Hanover BÖAG
Börse München München 1830 Börse München
Börse Stuttgart Stuttgart 1861 Börse Stuttgart
Deutsche Börse Group Frankfurt Deutsche Börse Group
Eurex Frankfurt 1998 EUREX
Frankfurt Stock Exchange Frankfurt 1585 FWB
Gibraltar Gibraltar Gibraltar Stock Exchange Gibraltar 2006 GibEX
Greece Greece Athens Stock Exchange Athens 1876 ATHEX
Hungary Hungary Budapest Stock Exchange Budapest 1864 52 BET
Iceland Iceland Iceland Stock Exchange Reykjavík 1985 11 OMX Nordic Market
ICEX
Republic of Ireland Ireland Irish Stock Exchange Dublin 1793 ISE or ISEQ
Irish Enterprise Exchange Dublin 2005 IEX
Italy Italy Borsa Italiana Milan 1808 BIt
Kazakhstan Kazakhstan Kazakhstan Stock Exchange Almaty 1993 KASE
Latvia Latvia Riga Stock Exchange Riga 1816 OMX Baltic Market
Lithuania Lithuania Vilnius Stock Exchange Vilnius 1993 OMXV
Luxembourg Luxembourg Luxembourg Stock Exchange Luxembourg (city) 1927 Bourse de Luxembourg
Republic of Macedonia Macedonia Macedonia Stock Exchange Skopje 1995 MSE
Malta Malta Malta Stock Exchange Valletta 1992 Borza Malta
Moldova Moldova Moldova Stock Exchange Chişinău 1994 BVM
Montenegro Montenegro Montenegro Stock Exchange Podgorica 1993 MNSE
Netherlands Netherlands Euronext Amsterdam Amsterdam 1602 Euronext Amsterdam
Norway Norway Oslo Stock Exchange Oslo 1819 Oslo Børs
Poland Poland Warsaw Stock Exchange Warsaw 1817 439 WSE
Portugal Portugal Euronext Lisbon Lisbon 1769 66 Euronext Lisbon
OPEX Lisbon 2003 OPEX
Romania Romania Bucharest Stock Exchange Bucharest 1882 70 BVB
RASDAQ Bucharest 1996 1486 BVB
Sibiu Stock Exchange (futures) Sibiu 1997 BMFMS
Russia Russia Moscow Interbank Currency Exchange Moscow 1992 MICEX
Russian Trading System Moscow 1995 RTS
Saint Petersburg Stock Exchange Saint Petersburg 1811 SPBEX
Serbia Serbia Belgrade Stock Exchange Belgrade 1894 BELEX
Slovakia Slovakia Bratislava Stock Exchange Bratislava 1991 BSSE
Slovenia Slovenia Ljubljana Stock Exchange Ljubljana 1989 61 LJSE
Spain Spain Bolsa de Valores de Barcelona Barcelona Bolsa de Barcelona
Bolsa de Valores de Bilbao Bilbao Bolsa de Bilbao
Madrid Stock Exchange Madrid 1831 Bolsa de Madrid
Mercado Oficial Español de Futuros y Opciones Madrid 1989 MEFF
Bolsa de Valores de Valencia Valencia Bolsa de Valencia
Sweden Sweden Nordic Growth Market Stockholm 2003 NGM
Stockholm Stock Exchange Stockholm 1863 289 OMX Nordic Market
Switzerland Switzerland SIX Swiss Exchange Zürich 1850 SIX Swiss Exchange
Bern eXchange Bern 1888 BX
Turkey Turkey Borsa Istanbul Istanbul 1985 417 BIST
Ukraine Ukraine PFTS Ukraine Stock Exchange Kiev 2002 PFTS Stock Exchange
Ukrainian Exchange Kiev 2008 UX
United Kingdom United Kingdom London Stock Exchange London 1801 2800 LSE
PLUS Markets London 2004 [N 1] PLUS Markets

 

If you are a publicly traded company and trade on any of the exchanges above you will be affected by this directive.

Also, it is interesting to see that NYSE and NASDAQ both are represented in some ways on this list above. For example NYSE and Euronext are owned by the same parent company – The IntercontinentalExchange Group (ICE).  Euronext has connections to the markets in Belgium, France, the Netherlands, Portugal, and the UK.

The NASDAQ OMX seems to have its name (both OMX and NASDAQ) associated with several exchanges above including Armenia, Denmark, Estonia, Finland, Iceland, Sweden etc.

I’m not sure how these connections tie into this directive, but I think its interesting to point them out as the world becomes more global and exchanges become truly global how do regulations like the EU directive, with the clause above effect these global exchanges?  And what does that mean going forward?

It gets even more interesting when you look at the fact that the NYSE and the NASDAQ are both signatories of the Sustainable Stock Exchanges Initiative (SSEI): http://www.sseinitiative.org/.

The initiative comes from a collaboration between PRI, UNEP, UNCTAD, and UNGC and many of the partners in the initiative already have listing requirements for Sustainability reporting (ex, JSE , BM&F Bovespa).

To become a partner exchange SSEI asks that the exchange publicly endorses the following statement:

We voluntarily commit, through dialogue with investors, companies and regulators, to promoting long term sustainable investment and improved environmental, social and corporate governance disclosure and performance among companies listed on our exchange.

They have also both done their own GRI Sustainability Reports:

NASDAQ: http://www.nasdaqomx.com/digitalAssets/84/84295_2012nasdaqomxsustainabilityreportv2.pdf

NYSE: https://www.nyx.com/sites/www.nyx.com/files/14977_2012_cr_report_130803.pdf

AND

BREAKING NEWS out of Boston (Mar 26th, 2014) – as I write this article CERES, BlackRock (the largest asset manager in the world) and other major institutional investors released their recommendations for listing requirements on exchanges titled:

Investor Listing Standards Proposal: Recommendations for Stock Exchange Requirements on Corporate Sustainability Reporting

These standards will be sent directly to the World Federation of Exchanges (WFE – the trade group for exchanges) who has launched a Sustainability Working Group to discuss and debate sustainability disclosure issues with member exchanges (virtually all global exchanges in the world).

Here’s what NASDAQ had to say:

“We need a joint solution that will help bring more consistent and comparable information to all markets, and will not leave any one exchange at a competitive disadvantage for taking leadership in this space,” NASDAQ OMX CEO Robert Greifeld said, speaking of the sustainability disclosure engagement process. NASDAQ OMX and Ceres have been working together for almost two years on this issue. 

NASDAQ OMX Vice Chairman Meyer “Sandy” Frucher stressed, “What we hope comes out of this process is strong support by exchanges around the globe to move together to create a more uniform approach to sustainability reporting.

“We committed last year, at the urging of institutional investors within Ceres’ Investor Network on Climate Risk, to provide thought leadership for our listed companies on sustainability reporting guidance,” Frucher continued. “To provide us with greater clarity on what investors want in such guidance, INCR, with support from the Principles for Responsible Investment, launched a global consultation among investors, and presented us with a proposal that we are now discussing with other exchanges.”

Here’s what BlackRock had to say:

“Cross border collaboration by stock exchanges will help shift public companies towards more comparable and meaningful disclosure of ESG (environmental, social and governance) risk factors,” said Gwen Le Berre, Vice President of Corporate Governance and Responsible Investment at BlackRock, the world’s largest asset manager with $4.3 trillion in assets under management. “This will enable investors to more accurately value companies and make better informed investment decisions.”

 

Here is the full release which has many other quotes from very important people in very important places demonstrating their commitment to moving this forward:

http://www.ceres.org/press/press-releases/world2019s-largest-investors-launch-effort-to-engage-global-stock-exchanges-on-sustainability-reporting-standard-for-companies

To read the release on the WFE launching its Sustainability Working Group, visit: http://www.businesswire.com/news/home/20140325006381/en/World-Federation-Exchanges-WFE-Launches-Sustainability-Working#.UzL2styt-_Y

The following exchanges came together to initially launch the WG:

  • BM&FBOVESPA
  • Borsa Istanbul
  • Borsa Malaysia
  • CBOE
  • CME
  • Deutsche Börse
  • InterContinental Exchange/NYSE
  • Johannesburg Stock Exchange
  • NASDAQ OMX
  • National Stock Exchange of India
  • Shenzhen Stock Exchange

So when you take all of this into account, why are you still reading this article, and why haven’t you already started working with me to get started on Sustainability reporting? 😉

That was a joke of course, but seriously – one way or another you will be affected – so get in front of these coming regulations/mandates because if you are not, you will be scrambling to get in compliance, and in a position of weakness compared to any competitors that are already doing it.  If you are already reporting, kudos to you, and you will be in a position of strength against your competitors – you have strategically positioned yourself well in the new global environment.   Just make sure you are covering all your bases and your reporting is in-line with whats expected and global standards.

This is not to mention the additional pressures for disclosure and transparency coming from:

  • Key Customers
  • Employees
  • Suppliers
  • NGOs
  • Investors
  • Government
  • Community
  • and other Stakeholders

Which I could write a whole additional book about.

I think its clear to see that the question is not SHOULD you start reporting, its HOW will you get started as quickly as possible.  Your window of opportunity to be prepared is closing, and the time is now to move on this if you have been questioning whether or not to get started.

At G&A we continue to watch these trends shaping the global markets.  We position ourselves at the intersection of corporations and the capital market.  We monitor the groups that shaping corporate valuation and reputation in today’s modern global marketplace.  If you have any questions or would like to talk more about these topics please reach out to me at lcoppola@ga-institute.com.

Best,

Louis D Coppola

For your reference here is a copy of the EU draft directive in full:
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52013PC0207

And Here is the EU portal for non-financial disclosures:
http://ec.europa.eu/internal_market/accounting/non-financial_reporting/index_en.htm

 

 

Just Back From Amsterdam / GRI – by Louis D. Coppola

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By Louis D. Coppola, Executive Vice President, G&A Institute

I recently returned from The Netherlands where the next iteration of the Global Reporting Initiatives’ Guidelines was released at the annual global GRI conference (which took place in GRI’s home city, Amsterdam).

There were many changes announced regarding the “G4” –the next generation of GRI reporting guidelines.  These include the removal of the familiar “A-B-C” Application Level system; a stepped up concentration on materiality; and, further alignment with existing recognized standards like CDP and UN Global Compact. Continue reading →