Stock Exchanges for Sustainable Development Goals

As part of the global community Stock Exchanges across the global are required to step up and engage stakeholders in the capital markets eco-system (i.e. regulators, investors, financiers and businesses, etc) on their role towards creating better communities. In evaluating the 20-Sustainable Development Goals (SDGs), one will clearly find that four (4) SDGs are relevant to stock exchanges, and that exchanges are best positioned to support these goals. The four goals are Goal 5 – Gender Equality; Goals 12 – Sustainability Information; Goals 13 – Climate Change; and Goal 17 – Global Partnerships.
And so, to start contributing to the achievement of the SDGs, exchanges can make a difference with these 5 steps:
1. ESG Reporting Guidance – Exchanges are required to assist companies by providing guidance in making sustainability information public.
2. Dialogue – where Exchanges can engage fellow exchanges and investors and issuers as well as other stakeholders, in sensitization and voluntary compliances
3. Sustainability Products – Exchanges are expected to help incentivize and mobilize finance for SDG areas through products such as Environmental protection, Social Responsibility and Good Governance (ESG) indices and green bond listings.
4. Listing Requirements – where Exchanges are required to strengthen their listing requirements to encourage the disclosure and use of sustainability information – especial ESG related information.
5. Join a Global Partnership: Exchanges are encouraged to join the UN-Sustainable Stock Exchange (UN-SSE) Initiative as partner exchanges and participate in its workgroups to share best practices and promote sustainable markets.In mid-2016 the Dar es Salaam Stock Exchange made a conscious decision to join the UN-SSE Initiative. And, for the past two and a half years we have focused on engaging our members to raise awareness and sensitizing them to appreciate their role in creating a better world in course of their investments, capital raising, running businesses, etc. Our engagements have been to extent of Capacity building workshops, enhancing follow ups on continuous listing and membership obligations – especially in the area of transparency and good governance.
The other initiative towards these ongoing engagements has been the launching of DSE Members Award, which is annual event involving collection of data and information and our members about their practices and whether in their undertaking, among others, the aspects of environment protection, corporate social responsibility, gender equality, and good governance are clearly considered, monitored and reported. These activities culminate into a final event, of recognizing, and awarding members that have performed better than others in these specific criteria. To our estimate, this initiative has sharpened awareness of ESG, Sustainability reporting and Responsible investing.
Why does this matter? the global interest in sustainable investment is a catalyst for change and some DSE-listed companies, especially those which subsidiaries to multinational entities have made some positive strides in the area of ESG practices and disclosures. As we move towards integrating sustainability reporting as part of our continuous listing obligation and making these part of the listed companies annual reports, which we intend to achieve by 2020 — sustainability thinking into business strategy should be embraced, not only by listed members of the DSE, but other categories of members as well – i.e. stockbrokers, nominated advisers, custodian banks, etc.
As mentioned above, in 2016 the DSE signed into the United Nations (UN)-Sustainable Stock Exchange (SSE) Initiative — a project of the United Nations co-organized by the United Nations Conference on Trade and Development (UNCTAD), the UN-Global Compact, and the UN-supported Principle for Responsible Investment (PRI); partnering with other key stakeholders including the World Federation of Exchanges (WFE) – to which the DSE is an Affiliate member, and the International Organization of Securities Commissions (IOSCO) – for the objective of providing a multi-stakeholders learning platform for stock exchanges, investors, regulators, and companies to adopt best practices in promoting corporate sustainability. In collaboration with investors, regulators, and companies, they strive to encourage sustainable investment.
Being a partner exchange to the UN-SSE Initiative, among other requirements is for the exchange to promote sustainability thinking and strategies as well as to consider ESG factors more explicitly in their practices and disclosures/reporting, in line with international best practices. Our purpose real is about trying to get the market to think more holistically about what is important, then disclose this thinking to our stakeholders, and embedding these factors, and hopefully change their behavior on matters of environmental sustainability, becoming more inclusive and socially responsible, becoming gender sensitive in their choices, as well as pursue and practice best standards of good corporate governance – including become more transparency in their disclosures, not only in relation to the past, but also the future of their businesses.
Some of the exchanges, even in our continent, have already included sustainability and ESG reporting in their listing (membership) and continuous listing (membership) obligations rules. Stock exchanges in South Africa, Egypt, Morocco, etc are in this stage already; other exchanges have creating rules for listing green bonds – South Africa, Egypt, Mauritius, Kenya, etc stock exchanges have green bonds listing rules already, while others such as Nigeria have created Responsible Investment Indices – aiming at sharpening the awareness of responsible investing. For the DSE, as I indicated above, we are at the sensitization and awareness creation stage as well as encouraging voluntary disclosures. However, the intent is to have these issues embedded in our rules by year 2020 – later this year we intend to share with our members the Model Guidance on Reporting ESG Information.

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