have historically been the primary
implementing authority, responsible for 114 of the
167 policies in our inventory (68%).
Securities regulators
are the distinct minority
player, implementing only eight sustainability
disclosure policies since the early 1970s, or 5%
of all policies reviewed in our study.
• The 45 stock exchanges in our sample were
responsible for 31 disclosure policies
, all of
which were implemented after 2000, and in
many cases at the behest of government or
securities regulators.
Our analysis gives rise to three main recommendations.
First, stock exchanges—
and policymakers of all
—that are considering implementing
a sustainability disclosure policy would be well-
advised to structure it as a mandatory, prescriptive
and broad instrument. Mandatory policies impose
reporting obligations on affected companies,
although the degree to which policymakers can
(or choose to) impose this characteristic varies.
Prescriptive policies are clear and provide details
about the expected disclosures. Broad policies—
those that cover a wide range of sustainability
indicators and offer few carve outs in terms of
company size or industry type—are desirable
because they offer flexibility and cast a wide
reporting net. In order to craft policies that are
prescriptive and broad, policymakers can reference
sustainability reporting standards developed by
transnational standard-setters, such as the Global
Reporting Initiative (GRI). This type of policy
hybridization—public policymakers using privately
developed standards—is increasingly used in the
financial and health & safety industries, and offers
clear benefits in the sustainability reporting field.
stock exchanges
have hitherto played
a relatively minor role in the development of
sustainability disclosure policy, although their
role is recognized to be hugely significant.
By incorporating clear sustainability disclosure
requirements into their listing standards, stock
exchanges can create a powerful incentive for
companies to measure and publicly disclose
sustainability performance data to the market.
Many stock exchanges have expressed the
legitimate concern that imposing stricter listing
requirements could discourage future listings, which
runs central to their business model. While this
perspective is logically sound, we recommend that
stock exchanges invest the necessary human and
financial resources to fully explore the perceived
negative trade-off between sustainability standards
and the listing propensity of public firms. This
could take the form of interviews with senior
management at both existing and prospective
listings. CK Capital uncovered sparse evidence to
support this perceived negative trade-off, indicating
more research in this area is urgently required.
Third, of all the players that can influence corporate
behaviour through policy, the world’s
have to date been the least prolific,
which is perhaps understandable given their
historic mandate. But, like stock exchanges,
securities regulators could theoretically play
a significant role by integrating sustainability
disclosure into capital markets requirements. We
recommend that the
International Organization
of Securities Commissions (IOSCO)
set up a
roundtable to explore whether (and how) capital
markets rules to facilitate corporate sustainability
disclosure could be in the long-term interest of
its membership.
Additionally, we recommend that the
Federation of Exchanges (WFE)
build a forum
that its members can use to share best practices
regarding the integration of sustainability
disclosure standards into listing requirements.
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