Stock Exchange to rollout ESG reporting standards by year-end

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ESG reporting standards

Consistent with global best practices, the Ghana Stock Exchange (GSE) will introduce dedicated guidelines for standards on Environmental, Social, and Governance (ESG) reporting for listed companies by the end of the year, its Deputy Managing Director, Abena Amoah, has indicated.

The move represents an additional layer in efforts by the regulators and operators of the Accra bourse to deepen capital market operations. It is expected to significantly expand the breadth, specificity and rigour of corporate transparency and encourage sustainable investment.

“We are confident about introducing guidelines for ESG reporting by the end of the year,” Ms. Amoah said when Fast Moving Consumer Goods (FMCG) manufacturing and distribution company– Unilever – took its turn at a Facts Behind the Figures session organised by the Exchange.

Speaking to the B&FT after the launch, Ms. Amoah confirmed that the reporting standard will not be mandatory for all issuers.

She, however, added that a significant number of firms have already begun reporting on ESG-related issues and expressed optimism that a formal framework would only serve to standardise and deepen the practice.

“Investors are becoming more critical of these issues. Full disclosure would only serve to enhance confidence beyond the GSE to reach the wider financial services industry,” she said.

When introduced, the GSE will join more than 60 stock exchanges around the world which provide guidance on ESG reporting, according to the United Nations Sustainable Stock Exchanges (SSE) – of which the GSE is a member. Already, a number of issuers, including Unilever, have highlighted an increasing shift toward more renewable sources of energy for their operations.

Last year, the capital market regulator, the Securities and Exchange Commission (SEC) signed an agreement with the International Finance Corporation (IFC) to develop and introduce green bonds in the country.

Speaking at the time, the Director-General of the Commission, Daniel Ogbarmey Tetteh, said the partnership and the ensuing product will deepen the market, ensure sustainability and provide value for investors.

“Sustainable financing is here with us, and I can confirm that this year, we as the SEC will be working on the framework for the issuance of green bonds and that will definitely open the way for a lot of activity in that space.”

Burgeoning issue

Environmental and social issues have gained and sustained the attention of financial markets, especially over the course of the last decade, as investors and related stakeholders push for the attainment of relevant Sustainable Development Goals (SDGs) and to combat climate change and its impact, through investment choices.

PwC’s 2021 Global Investor ESG Survey – which engaged 325 investment professionals from 43 territories with more than a combined US$11.6 trillion assets under management – showed that ESG factors now increasingly drive investment strategies, describing it as a “make-or-break consideration for leading investors globally,” as half of the investors surveyed expressed a willingness to divest from companies that are not taking sufficient steps to address ESG issues.

The survey, however, highlighted concerns over a number of deficiencies in existing ESG reporting frameworks, citing inconsistencies in standards.

“Stakeholders cannot easily differentiate between companies on ESG-related performance – making capital allocation decisions difficult for all in the ecosystem. The clear message: the time for a single set of globally aligned non-financial reporting standards is here,” the survey noted.

 

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