Fostering a culture of transparency

Banking & Finance
| The European | 22nd July 2019
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The benefits sustainability reporting offers businesses can no longer be disputed. Beyond the more widely understood reputational advantages, greater transparency is helping companies perform better in the market place, through improved customer relationships and operational efficiencies. Meanwhile, stock markets and regulators are increasingly acknowledging that sustainability reporting by listed companies helps improve the long-term stability, trustworthiness and financial value of markets.

The GRI Standards – the most widely used sustainability reporting framework in the world – offers a common language for disclosing and comparing ESG data. That is why exchanges in 40 countries and regions around the world now refer to GRI  (Global Reporting Initiative) in their listing requirements or guidance.

More than 90% of the world’s largest 250 corporations by revenue report on ESG – of which three-quarters use the GRI framework. However, more needs to be done to drive uptake across more listed companies, getting the message across that sustainability reporting cannot be deemed an optional extra.

Supported by GRI’s global network of regional hubs, we are engaging with stock exchanges around the world. We recognise their crucial role, not only in encouraging more ESG reporting by businesses, but also to raise the bar in the provision of good corporate governance practices.

Our collaboration with the Sustainable Stock Exchanges Initiative and the World Federation of Exchanges is helping us make progress, by driving alignment and consistency in ESG reporting as well as increasing focus on the contribution of business in making progress towards the UN Sustainable Development Goals.

Internationally, we are seeing that effective collaboration between GRI, stock markets and national regulators is helping to drive greater transparency and responsible practices by listed companies. For example, Taiwan has introduced mandatory GRI reporting for all large companies in high-impact sectors, covering food
processing, chemical and financial services.

As GRI looks to further encourage the spread of sustainability reporting, we have increased our work with stock markets in emerging economies. Two most recent projects saw GRI support the Colombo Stock Exchanges and the Dhaka Stock Exchange to develop ESG reporting guides. As a result, all listed companies in Sri Lanka and Bangladesh now have access to best practice guidance.

However, more advice and support on how to use ESG reporting most effectively is still needed. And this is where stock exchanges – uniquely positioned at the centre of financial markets and connecting companies, investors and regulators – have a key role.

So, it is encouraging that exchanges are increasingly taking steps to ensure they have the knowledge, skills and processes in place to proactively encourage businesses to be more transparent. This is welcome, but we need the momentum to further increase and spread internationally.

Greater corporate transparency is a necessary ingredient as we look to foster a culture of sustainable development and unlock the many benefits – financial and otherwise – that ESG reporting can offer. As a trusted and independent partner, GRI will continue to be there to offer stock exchanges our encouragement, every step of the journey. 

Further information

www.globalreporting.org

Written by Peter Paul van de Wijs, Chief External Affairs Officer at the Global Reporting Initiative

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