Eleven stock exchanges from eight countries have set up a sustainability working group to try to ‘build consensus’ on the use of environmental social and governance (ESG) information.
The working group has been created by the World Federation of Exchanges (WFE), which decided on the move at a recent meeting in Mumbai. Among exchanges to have committed to take part so far are Borsa Istanbul, Bursa Malaysia, Deutsche Borse, Johannesburg Stock Exchange, Nasdaq OMX, Shenzhen Stock Exchange, and the National Stock Exchange of India. More are expected to join over the next few months.
The 60-member WFE said the working group will have ‘a mandate to build consensus on the purpose, practicality, and materiality of ESG data’. It will also carry out research on the topic, make the findings public, and put forward recommendations on the use of ESG data to WFE member exchanges.
Ravi Narain, chairman of the working committee that established the group, said it had been formed due to ‘overwhelming interest’ among WFE members, who are keen to work together to ‘tackle key issues and promote best practices’ on the presentation and interpretation of ESG data. He added that exchanges were committed to ‘constructive future collaboration’ on the subject ‘which will transcend competitors and regions’.
Aside from Nasdaq OMX, three other US-based exchanges are supporting the working group – CME Group, which operates large derivatives and futures exchanges in Chicago and New York, Chicago Board Options Exchange, and IntercontinentalExchange/NYSE.
The terms of reference for the group have been finalised, but its members will determine other matters at its first meeting, and the chairmanship will be rotated on a regular basis.
Evan Harvey, director of corporate sustainability at Nasdaq OMX and one of the initiators of the working group, said it would ‘find ways to engage exchanges on ESG issues’ and to harness ‘the power of transparent data’. He added that one outcome might be ‘a common global standard in terms of ESG data and a material definition that satisfies all exchanges and companies that list on those exchanges’.