The Nigerian Stock Exchange (NSE) will this year launch its guidelines on sustainability disclosures as part of efforts to ensure that quoted companies contribute to improving and sustaining standards of living by doing their businesses in a way that preserves the environment.
Chief Executive officer, Nigerian Stock Exchange (NSE) Mr. Oscar Onyema, said the Exchange has held itself accountable to the highest standards of sustainable development, which will provide quoted companies with the rules and framework for sustainability reporting.
Onyema said the NSE, as a sustainable Exchange, has continued to highlight the importance of sustainable business practices in delivering value and supporting economic growth, noting that the NSE is intensifying its advocacy efforts to support the integration of the Environmental, Social and Governance (ESG) imperatives in the Nigerian capital market.
The World Federation of Exchanges had in November 2015 issued guidelines on ESG reporting. WFE had identified 33 ESG indicators that might be of concern to exchanges.
While the guidelines are not compulsory, they however serve to provide framework and benchmarks on ESG for consideration by other Exchanges. NSE is a member of WFE.
Deloitte, the global financial services group, noted that while sustainability reporting has traditionally been voluntary, heightened regulatory and legal scrutiny, along with other market developments, indicates that the transparency and accuracy of sustainability reporting is increasingly important.
“For example, recent high-profile incidents involving automotive, big-box retail, and energy and resources companies highlight growing attention to public company nonfinancial disclosures-such as how environmental, social, and governance (ESG) or sustainability topics are disclosed to stakeholders, especially investors.
In addition, the climate change agreement reached at the 2015 Conference of Parties (COP21) and several other important developments highlight the movement toward more standardised, transparent, and meaningful ESG disclosures that drive value for users of the reported information and for public companies themselves, Deloitte stated in the report titled: sustainability reporting, getting ahead of the curve.
Investors and capital markets institutions are increasingly factoring ESG performance into investment decisions.
In a September 2015 ESG survey published by CFA Institute, 73 per cent of investors responding to the survey said they take ESG issues into account in their investment analysis and decisions.
The top reason investors consider ESG-related information is not to derive reputational benefit but to determine whether a company is adequately managing risk.
Meanwhile, Onyema has urged newly inducted stockbrokers to uphold the integrity of the stock market.
According to him, the Exchange believes that people will always make the difference in any endeavour, especially the capital market, when every other supporting conditions are right.
It is for this reason that it carefully puts prospective employees, dealing members, and other players through a stringent screening process that ensures only the cream of the crop make it through its doors.