As further evidence of its commitment toward deepening the domestic capital market and in its quest to transition from a frontier market to an emerging one, the Ghana Stock Exchange has launched a guidance manual for disclosures on Environmental, Social, and Governance (ESG) reporting for listed companies.
The move has been some three-plus years in the making, and is the culmination of efforts spearheaded by the Global Reporting Initiative (GRI), Swiss State Secretariat for Economic Affairs (SECO) and African Securities Exchanges Association (ASEA).
In her remarks at the launch event, incoming Managing Director of the GSE, Abena Amoah, said while the milestone sees the Accra bourse meet a number of regulatory requirements, the Exchange has proceeded on this path as it is acutely aware of the benefits to its operations and those of listed firms.
“It is well-known fact that businesses across the globe have moved beyond solely focusing on financial metrics in performance evaluation, and are now focusing on both the positive and negative impacts of their operations on the environment… the GSE is thankful to our partners for their support in producing this ESG guide that helps Ghanaian companies be more accountable for the impact of their businesses,” she said, adding that the manual will help GSE-listed companies better-position themselves to be globally competitive.
To give extra impetus to the drive, she said, GSE will subject itself to the standard and begin reporting on its own ESG impact.
“We at the Exchange ourselves pledge our commitment to continue working with stakeholders to support the sustainable future that we want, and the standard must be set by us – so we will start ESG-reporting at the Ghana Stock Exchange as well,” Madam Amoah added.
Deputy Director-General Legal at the Securities and Exchange Commission (SEC), Deborah Agyemfra, said implementing the guidelines will prove critical in the Commission’s market expansion goals as outlined in the 10-year Capital Market Master Plan.
Adding that the move will lead to enhanced transparency on the market, she said: “For us as regulators, we want everything to be transparent and fair; and once there is a guideline it makes our work easier, and will consolidate the strong foundation that has been laid”.
With the value of global sustainable bond issuance set to surpass US$1.5trillion in 2022 – up from US$1.1trillion in 2021 – despite a slowdown in general bond issuances, she said the SEC is continuing to work on comprehensive guidelines for the issuance of sustainable bonds.
On his part, the Director of GRI Africa, Douglas Kativu, said the GSE’s initiative is consistent with global best practices – which have seen the role of stock markets expand to include policies and instruments that are designed to promote responsible business conduct and sustainable practices.
Amplifying the theme of transparency, he said the move will be crucial for the GSE’s credibility and efficiency.
“Without transparency, there is no trust; and without trust, markets will not function efficiently and institutions will lose their credibility,” Mr. Kativu said.
Departing Managing Director of the Accra Bourse, Ekow Afedzie, disclosed that guidelines will be incorporated into the listing rules, which are undergoing a revision – adding that there will be further interactions with key stakeholders prior to full implementation next year.
He further stated that implementation, which will not be mandatory at its commencement, will begin with large-capitalisation companies with the expectation that others, aware of the benefits to their operations and profitability, will join in voluntarily.
“With increasing interest in our market, we are making sure that everything we do meets the highest global standard,” he said.
The move will see the GSE join more than 60 stock exchanges across the globe which provide guidance on ESG reporting, according to the United Nations Sustainable Stock Exchanges (SSE) – a body of which the GSE is a member.
ESG has risen rapidly and become a mainstay of businesses’ operational strategies. In its Asset and Wealth Management Revolution 2022 report, which surveyed some 250 institutional investors and asset managers worldwide, advisory firm PwC reported a marked increase in ESG-related assets under management (AuM).
The asset managers surveyed are expected to increase their ESG-leaning portfolios from US$18.4trillion in 2021 to US$33.9trillion by 2026. With a projected compound annual growth rate (CAGR) of 12.9 percent, ESG assets are forecasted to constitute 21.5 percent of the total global AuM by 2026.
