World Exchanges Encouraged To Report Indicators of Long-Term Sustainability
On 4 November, the World Federation of Exchanges (WFE) released a set of 34 sustainability measures that include environmental, social, and governance indicators. WFE recommends that its member exchanges implement these indicators into the disclosure requirements for listed companies.
The WFE is an industry trade organization made up of 99 organizational members, including 64 regulated exchanges (e.g., NASDAQ and NYSE) across the globe. More than 44,000 companies list on WFE exchanges. It acts to establish standards for publicly regulated securities markets and to ensure good international corporate governance.
WFE recommends reporting indicators such as ratios of CEO to median pay and male to female pay; employee turnover; workforce and board gender diversity; injuries; greenhouse gas emissions; water and waste management; child and forced labor; corruption and anti-bribery; and tax transparency. It also provides advice on how to roll out these new reporting metrics.
The guidance, while voluntary, could lead to greater corporate transparency and listed companies would benefit by attracting more long-term investors and identifying opportunities to save costs and lower risk. Long-term sustainability has gained traction in financial markets recently, particularly as institutional leaders warn that issues such a climate change will lead to financial crisis unless the private sector and its regulators do more to ensure transparency regarding current and future carbon emissions.