Introducing Nasdaq’s Global ESG Reporting Guide

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Nasdaq recently introduced its updated ESG Reporting Guide, a resource for global companies that aims to help navigate new developments in the field of environmental, social and governance (ESG).

The guide addresses current sustainability efforts, including the Sustainability Accounting Standards Board (SASB), the UN Sustainability Development Goals and the Task Force on Non-Financial Climate Disclosures (TCFD), and outlines the latest third-party reporting methodologies. It also aims to encourage corporate sustainability actions, such as the documentation and management of ESG performance, the integration of ESG indicators in enterprise risk management systems, the disclosure of ESG data and the inclusion of ESG in indexes.

This resource builds on Nasdaq’s first ESG Reporting Guide, which was unveiled in March 2017. The first guide was developed to support Nasdaq’s Nordic and Baltic companies in their search for a more meaningful and sustainable connection with investors. At the time, those regional markets were some of the first with clear investor expectations and greater regulations with regards to ESG.

Over the past two years, however, ESG has grown rapidly, spreading to global markets and investors. The growth in ESG comes amid a growing body of academic and analytic evidence that suggests ESG excellence correlates with other benefits, such as lower costs of capital, reduced shareholder turnover and enhanced talent recruitment and retention, according to the guide.

Institutional investors are also pushing for KPIs that provide real insight into long-term value creation, and some activist investors are pressuring companies on ESG topics as well, asking companies to consider reducing their carbon emissions and begin issuing gender pay gap reports. 

The Investment Trends’ 2018 Adviser Product and Marketing Needs Report revealed that ESG investing is becoming a fast-growing movement for Australian financial planners. The proportion of advisers who said they provided advice on sustainable investing strategies increased from 19% to 34% year over year. 

“ESG data points have become essential tools, not only for investors seeking performance indicators, but also for companies trying to increase operational efficiency, decrease resource dependency, and attract a new generation of empowered workers,” said Nelson Griggs, president of the Nasdaq Stock Exchange. “Our global ESG Reporting Guide is intended to serve as a resource for today’s corporate leaders to create a world in which all market participants are able to share in economic opportunities.”

As both public and private companies consider ESG initiatives, they must also account for new developments in the field. The SASB advocates for the inclusion of certain sector-based ESG disclosures in filings with the U.S. Securities and Exchange Commission (SEC), while the TCFD recommends much more robust environmental reporting in financial filings. The UN also has its 17 Sustainable Development Goals which are a universal call to action to end poverty and protect the planet.

“Companies that compete and survive in a resource-constrained world will become the new baseline, and market forces will reward some and punish others,” said Evan Harvey, Nasdaq’s Global Head of Sustainability. “Nasdaq must itself navigate this transition (to new energy sourcing, better human capital management, more inclusive economics, and so on) and assist our listed companies in doing likewise. That is why we pursue this work, and why we offer this guide as a resource.”

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