There has been a growing push on listed companies worldwide to issue sustainability reports. Some critics have said that this may lead to higher compliance costs, while others argue that it may translate into higher profits in the long term.
The NYSE, Euronext, Nasdaq OMX, ASX, HKex, and SGX - these are some of the stock exchange operators which were recently surveyed for a progress report on sustainable stock exchanges.
More than half of the respondents said they provide guidance on sustainability reporting for their listed companies. That is twice the number compared to two years ago.
Despite concerns over higher compliance costs, experts said that companies are warming up to the idea. And this could become a key factor in attracting investor interest.
Edoardo Gai, Head of Sustainability Services at SAM, said: “There is a positive business case, but we have seen that investors are also a little conservative on changing their perspective on companies. What is also very interesting to see is that corporations have changed their business case on sustainability. They have developed a sustainability strategy.
“Based on the data available, we see that corporations are embracing it, so I believe investors will follow. They just need to learn how to integrate this information and how to take value out of it, because this, I believe, is not straight-forward. I think once it starts to happen, we will see relatively fast growth in these kind of investments.”
The investment boutique said studies show that firms with a heavier focus on sustainability can outperform their peers.
In Japan, environmental standards and sustainability have already become an integral part of companies business plans and product development plans.
Scott Foster, Senior Analyst, Technology (sustainability) at BNP Paribas Securities, said: “They view it as a strategic advantage and I think if you look at products in the area of smart grids and eco-appliances and so on, there is something to this - just how you maintain growth and profitability in an era of resource constraint and ever stricter regulation.”
Going forward, as sustainability reporting becomes commonplace, most stock exchanges agree that they would welcome a global approach to sustainability reporting.
