Research under the microscope

Nasdaq Helsinki leads ranking of world’s stock exchanges on sustainability disclosure

2018 Sustainable Stock Exchange report released

Helinski, Finland is home to world's most sustainable stock exchange, according to a new report released by the UN Sustainable Stock Exchanges Initiative at the World Investment Forum this October.

The analysis of more than 4,300 companies listed on 35 stock exchanges provides a snapshot of disclosure practices for seven sustainability-related indicators including greenhouse gases (GHGs), payroll and water use.

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The Carbon Clean 200

By Andy Behar, Michael Yow and Toby A.A. Heaps
Investing in a clean energy future

Over the past five years, and growing dramatically leading up to and post-Paris COP 21, a movement of institutional and individual investors representing more than $3.4tn in assets under management have divested a portion of their fossil fuel investments and committed to divesting the balance in the next five years. The corollary of divesting fossil fuels is re-investing in the clean energy future. As an invitation to a larger discussion of how we can invest in a clean energy future, we created the Carbon Clean 200 (Clean200TM) – a list of the 200 largest companies worldwide ranked by their total clean energy revenues.

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Integrating sustainability performance into investment strategies and decision-making

Investors – what’s in it for them?

The number of investors who are integrating sustainability performance into their investment strategies and decision-making is on the rise. The number of signatories to the United Nations-supported Principles for Responsible Investment, an international network of investors working together to put the six Principles for Responsible Investment into practice, rose from 100 in April 2006 to 1,380 in April 2015, representing US$59 trillion in assets under management.

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Empowering responsible investing for long-term prosperity

Despite the notable progress made in corporate sustainability reporting, there is still much room for improvement.

Last September, the Rockefeller Brothers Fund announced its pledge to divest its fossil fuel holdings as part of a larger divestment movement that aims to deprive the industry of up to $50 billion (U.S.). Later that month, the Montreal Carbon Pledge was launched where investors commit to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis. To date, investors representing assets under management of $1.2 trillion have committed to the pledge.

Add to the above fact that there is currently about $45 trillion of assets under management by 1,314 United Nations Principles for Responsible Investment (UNPRI) signatories – up from only $4 trillion back in 2006. UNPRI signatories commit to integrate six principals covering environmental, social and governance issues into their investment decision making and ownership practices.

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Emission impossible

Why don’t we know how much carbon companies are creating in their supply chains?

A significant portion of the greenhouse gas (GHG) emissions produced by major companies still haven't been measured.

We have a pretty good idea of how much carbon large companies emit when they make products because most of them are reporting those emissions regularly. But what about the emissions that are not as easily linked to a company’s activities? Think of, transportation in vehicles not owned by the company, outsourced activities, waste disposal and even the use of the product by the consumer.

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The need for speed

Investors can't make responsible decisions if companies don't release their sustainability data on time.

Companies may be spending too much time producing glossy reports about their good deeds and not enough time giving investors the information they need to make responsible decisions.

An often-overlooked problem with sustainability reports is that companies are slow to release them. This is partly because regulators do not enforce strict disclosure timelines, and partly because companies spend a lot of time and money producing reports for public consumption.

“Sustainability reports aren't primarily designed for investors, they’re designed for a wider stakeholder group with slightly different needs,” said Michelle de Cordova, director of corporate engagement and public policy at NEI Investments, which is home to Canada’s largest team of in-house socially responsible investment specialists.

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Assuring sustainability reports

A growing number of companies are auditing their sustainability data, but it remains a minority practice.

Since a growing number of economic decisions are being made based in part on sustainability-related information, ensuring the reliability of such data has grown in importance. One way to instill confidence in the underlying quality of sustainability data is to conduct an audit and provide assurance on that information. In the same way that regulated financial data needs to be audited by a qualified assurance provider, sustainability data can be reviewed by a third-party assurance provider.

The past few years have seen a notable rise in the number of companies auditing their sustainability data. This trend is largely a response to increasing pressure from various stakeholder groups for assurance on the reliability of corporate sustainability data. The rules about sustainability auditing are much less stringent than those that govern the auditing of financial data, and, accordingly, the extent and scope of an audit of sustainability data often varies significantly among companies in a given industry. This is because sustainability reporting is still largely a voluntary as opposed to mandatory activity, characterized by a lack of agreed-upon scopes and standards available to assurance providers.

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Asian countries work to balance prosperity

Corporate Knights shows which Asian countries are most successful at balancing economic, social and environmental prosperity.

It’s no surprise that Asia is home to some of the world’s fastest growing economies. On average, the Asian continent experienced a growth rate of 4.5% in 2013, or double the global average of 2.2%. Macau experienced the highest growth rate over the last year at 11.9%, according to the World Bank.

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Sustainable Asia

The introduction and ranking for the Sustainable Asia Scorecard.

A Swiss Re report released earlier this year offered some valuable insights into the sustainability challenges unique to Asia. The insurance giant learned that nine out of 10 cities in the world ranked most vulnerable to natural disaster are located in the Asia region.

Most of the disasters cited were of the kind expected to become more severe and frequent due to climate change – damage and life loss associated with flooding, storm surges and high winds. Flooding rivers alone are expected to affect 380 million people globally, most of them in Asia.

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Global 100 stock performance

Ranking’s sustainability indicators could serve as proxies for market outperformance.

The Global 100 Most Sustainable Corporations ranking, which Corporate Knights has published each year since 2005, is one of the world's most credible and widely followed corporate sustainability rankings.

What distinguishes the Global 100 from many other sustainability rankings is the nature of its methodology. Instead of relying on analyst judgment or rolled up “black box” sustainability scores, the Global 100 is driven exclusively by how companies perform on a set of 12 metrics covering resource, financial and employee management. Coupled with this “data driven” approach, every aspect of the project, including how each metric is calculated, and how the starting universe of about 4,000 stocks is whittled down to 100, is detailed on the Global 100 website.

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