Ethical investment: Stock exchanges need a new strategy Go compare with our comparison table

Ethical investment: Stock exchanges need a new strategy

13 September 2010 / by Rachael Stiles

A new report has called on stock markets around the world to improve their performance on sustainability issues.

EIRIS (Experts in Responsible Investment Solutions), a leading provider of responsible investment research, would like to see stock exchanges "sharpen their focus" on sustainability, concentrating on 20 leading developed and emerging markets.

Its report, Sustainable Stock Exchanges: Improving ESG standard among listed companies, "examines how systematically they incorporate full environmental, social and governance (ESG) standards into their listing rules and trading products."

The report also recommends various ways in which stock exchanges can improve the integration of environment, social and governance criteria into their investment analysis, and use it to shape their decision-making processes.

Among its suggestions are: mandatory disclosure of ESG standards;  requiring companies to put their sustainability strategy to a vote at annual general meetings; and markets should improve their own ESG standards and disclosure, the EIRIS suggested, if they are expecting companies listed on their exchanges to do so.

"By balancing regulatory and voluntary approaches, exchanges can play a key role in sustainable long-term wealth creation," comments Peter Webster, executive director at EIRIS.

"Whether through listing rules, the creation of sustainability indices, or giving investors votes on sustainability issues, their role at the centre of the financial system makes them key players. Interestingly, much of the leadership in this field at present is coming from emerging markets in general and from Asia in particular, but we see movement from exchanges around the world."

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