NASDAQ Exchange Publishes the “ESG Reporting Guide” for Corporate Managements and Boards




NASDAQ Exchange Publishes the "ESG Reporting Guide" for Corporate Managements and Boards

There is encouraging news for sustainability professionals coming from the world of stock exchanges this month.  The NASDAQ Exchange just published its guide for listed companies – as well for privately-owned firms as perhaps future IPOs for NASDAQ listing – for companies’ public ESG reporting.  This is the “ESG Reporting Guide – A Voluntary Support Program for Companies”.

The pilot program for the guide effort got underway with NASDAQ’s Nordic and Baltic markets in 2017; the May 2019 guide includes third party reporting methodologies for company leaders’ education.  The recommendations are “completely voluntary” for companies, the exchange emphasizes. Evan Harvey is the Global Head of Sustainability for NASDAQ and key player in development of the guide.

As the corporate ESG reporting pace continues to increase in both volume and velocity, company boards and managements do need more guidance on evolving ESG / sustainability standards and frameworks that could be used [for their increased disclosure and structured reports such as those published annually or periodically for their investors]. 

These frameworks, NASDAQ explains, include the Global Reporting Initiative Standards, (GRI); the standards of the Sustainable Accounting Standards Board for 79 industries; the TCFD recommendations (the work of the FSB’s Task Force on Climate-Related for Financial Disclosures); and (as example) the guidance and frameworks for industry reporting such as GRESB for the real estate industry. Note: G&A Institute is the Data Partner for the GRI in the U.S.A., U.K. and Republic of Ireland.

The NASDAQ guide developed along the lines of such ESG / sustainability reporting “being voluntary” by private sector companies underscores that we are yet not quite at the “order to publish” from the United States stock exchanges. Halfway ‘round the world, the Hong Kong and Singapore stock exchanges set the pace with such listed company rules.  In Hong Kong, listed companies must “comply or explain” for their ESG reporting; in Singapore, the rule is to publish the annual corporate sustainability report after 1/1/17 – also on comply or explain basis.

And in Europe, companies larger than certain market caps and employee counts must report on their CR activities; (“The European Directive of Non-Financial and Diversity Information by Certain Large Companies”, part of the EU’s Initiative of CSR.)

Getting to a “listed rule requirement” that exchange-listed companies publish an annual or more frequent corporate sustainability report is a heavy lift in the U.S. capital markets, which typically reflect the direction of the political winds in Washington DC. 

Right now, the chair of the SEC – the regulator of both the stock exchanges and publicly-traded companies – is a Republican and two other members of the five-member Commission are “Rs”.  Their party’s leader in the White House is busily dismantling environmental protection and other rules and pulling the U.S. out of the historic Paris Agreement on climate change.

Background:  The regulatory activities of the stock exchanges based in the United States are governed by statutes passed by the U.S. Congress (such as the Securities Act of 1933 and Exchange Act of 1934) and the stock exchanges therefore by federal law are designated as non-governmental “self-regulating organizations” or SROs. 

As SROs, the New York Stock Exchange and NASDAQ Exchange have authority to establish rules and regulations and set standards for companies (“issuers”) whose stock is listed for trading on their exchange.  Of course, the views of the listed company leaders and other stakeholders are considered when rules are being developed.

Proposed listing company or brokerage (“member”) rules are filed with the Securities & Exchange Commission (created by that 1934 law) to oversee and regulate certain activities. And so, the proposed rules for listed companies, brokerage firms and other entities are filed with SEC and public comment invited before SEC approval and then the exchange’s official adoption of the Rule.  A recent NASDAQ SEC filing example is: “Notice of Filing of Proposed Rule to Adopt Additional Requirements for Listings in Connection with an Offering Under Regulation A of the Securities Act” in April 2019.

Should the U.S. exchanges adopt rules requiring corporate ESG reporting?  Could they?  Will they? Will SEC review and approve such rules for exchange-listed firms?  These are important questions for our times.  Of course, many people are “Staying Tuned!”

An important P.S.: The 1934 Act also ordered publicly traded companies to file annual and other periodic reports.  In the 1970s, the NYSE listing rules required listed companies to begin publishing quarterly reports; some of the listed companies reacted with great alarm.  But shortly afterward the SEC made this a requirement for all listed companies. And so the familiar 10-K, 10-Q etc.  This extends to non-US companies raising capital in the U.S. such as listing their securities on an American exchange.

Click here to find out more about Hong Kong and Singapore exchange rules.

NASDAQ, NYSE, Hong Kong, Singapore – all are participating in the World Federation of Stock Exchanges (WFE) Principles to exert leadership in promoting a sustainable finance agenda. Those principles are explained in the report here.

This Week's Top Stories

Nasdaq Launches Global Environmental, Social And Governance (ESG) Reporting Guide For Companies
(Thursday - May 23, 2019) Source: NASDAQ - Nasdaq (Nasdaq: NDAQ) has announced the launch of its new global environmental, social and governance (ESG) reporting guide to support public and private companies. The 2019 ESG Reporting Guide includes the latest... 

More information is available at: https://business.nasdaq.com/esg-guide

Global Sustainability: Continuing Forward Momentum!

This Sustainable Technology Could Save America's Dairy Farms
(Monday - May 20, 2019) Source: Forbes - Dairy farms today face sharp criticism for their contribution to air and water pollution—criticism that’s punctuated by hits to the dairy industry like the rising popularity of plant-based milk alternatives and a decreasing dairy... 

The sustainable pioneers
(Monday - May 20, 2019) Source: PV Magazine - Change is not always easy. Many believe there is a contradiction between being cost-effective and being sustainable. Some fear that by looking at negative sides of the industry, we will add more fuel to the anti-solar fire.... 

Got a Good Sustainability Record? Get Better Finance Rates
(Tuesday - May 21, 2019) Source: NHI News - Suppliers who demonstrate progress in Walmart’s Project Gigaton or Sustainability Index Program can apply for improved financing from HSBC based on their sustainability ratings.

A five-step approach to engaging investors on sustainability
(Tuesday - May 21, 2019) Source: GreenBiz - I started my career in sustainability as an environmental, social and governance (ESG) analyst in 2005. Witnessing the mainstreaming of ESG investing in the past two years has been truly exciting. Today, I help companies... 

10 questions for Walmart's sustainable fleet leader  
(Thursday - May 23, 2019) Source: GreenBiz - Electric vehicles might be the hottest transportation topic of 2019, but for behemoth retailer Walmart, fuel efficiency has been the real star. That's because it can immediately save money on fuel costs and also slash carbon... 

Smithfield Foods Showcases Continued Leadership and Transparency in New Sustainability Report, Launches Unique Tool for Today’s Conscious Consumer
(Thursday - May 23, 2019) Source: Yahoo Finance - Smithfield Foods, Inc. is pleased to announce the release of its 2018 Sustainability Report, highlighting key milestones and ongoing efforts to feed the world’s growing population in a responsible way. Smithfield’s robust... 

4 reasons businesses should set sustainable packaging goals
(Wednesday - May 22, 2019) Source: GreenBiz - It seems that nearly every day there is a new headline about companies setting ambitious sustainable packaging goals in areas such as recycled content, responsible sourcing and recyclability. 

Generation closes $1B growth fund targeting sustainable startups
(Wednesday - May 22, 2019) Source: Tech Crunch - As the name implies, it plans to put the $1 billion to work backing later-stage startups that work on sustainability in at least one of three areas — environmental solutions; healthcare; and financial inclusion, including the..

The Future Of Sustainability For The Industries That Power Online Shopping, Explained
(Thursday - May 23, 2019) Source: Forbes - From large commerce companies like Amazon and eBay, to direct-to-consumer toiletry packs, to sustainable clothing, e-commerce has revolutionized our shopping habits and the ways companies do business. With the simple touch of a... 

What is sustainable rubber?
(Thursday - May 23, 2019) Source: Eco-Business - Rubber is one of the world’s most widely used materials, but irresponsible farming methods have led to deforestation and human rights abuses as the sector has grown. Could there be a better way? Eco-Business explores the... 

The Fashion Industry � Something Is Happening There�

Sustainability Is Linked to Privilege - Teasing Out the Truths from Copenhagen Fashion Summit
(Tuesday - May 21, 2019) Source: Forbes - Copenhagen Fashion Summit demonstrated very clearly that sustainability is strongly linked to wealth and privilege. The people creating the least environmental impact are invariably the world’s poorest people, and they are paying...

Consumers Are the Elephant in the Sustainability Room
(Monday - May 20, 2019) Source: High Snobiety - Fashion often shies away from discussing the elephant in the sustainability room: consumption. How can an industry built on growth respond to the fact that we all have too much stuff? 

4 steps to a more sustainable wardrobe
(Wednesday - May 22, 2019) Source: Treehugger - Transforming your conventional wardrobe to a sustainably sourced one can seem like a daunting task, but it needn't be. View it instead as a long-term project, something that will happen gradually as you shift your approach toward...

What Certifications to Look for When Clothes Shopping Sustainable
(Tuesday - May 21, 2019) Source: Green Matters - Think H&M, Forever 21, even Zara… These companies guilty of fast-fashion practices contribute to greenhouse gas emissions and since they seldom use sustainable textiles, these clothes generally consist of synthetic chemicals and...


Quick Scan of the Headlines:
ESG Topics & Front-of-Mind Issues

How Chase and The Big Banks Undermine Climate Action
(Monday - May 20, 2019) Source: International Business Times

What did Huawei do to land in such hot water with the US?
(Tuesday - May 21, 2019) Source: CNN

Top Reason for CEO Departures Among Largest Companies Is Now Misconduct, Study Finds
(Wednesday - May 22, 2019) Source: NPR

Climate change: Global sea level rise could be bigger than expected
(Wednesday - May 22, 2019) Source: BBC

Revealed: 1.6m Americans live near the most polluting incinerators in the US
(Thursday - May 23, 2019) Source: The Guardian

Sponsored Message


Headlines From the Corporate Sector

Whole Foods eliminating plastic straws from US stores in July. Expect new chicken, too.
(Tuesday - May 21, 2019) Source: USA Today

Little Caesars is the first national pizza chain to jump on the vegan meat bandwagon
(Tuesday - May 21, 2019) Source: Business Insider

Del Monte settles with EPA after 2016 ammonia release
(Wednesday - May 22, 2019) Source: Cooling Post

Jack in the Box has a minimum-wage problem
(Wednesday - May 22, 2019) Source: Yahoo Finance

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