- 2016, 12 f
Brazil climbed 14 places on the ranking of the world’s stock exchanges on disclosure of sustainability data, published annually by the Canadian financial research company Corporate Knights. The ‘Measuring Sustainability Disclosure: Ranking the World’s Stock Exchanges 2016’ report assesses 45 stock exchanges worldwide, representing 4,469 large publicly traded companies.
BM&FBovespa showed a remarkable improvement, improving to 10th from 26th in 2015 and 24th in 2014. Around 70% of large listed Brazilian companies disclosed all of environmental metrics energy considered in the report.
The report analyses the disclosure level of large companies listed on stock exchanges on matters regarding important social and environmental issues, such as payroll costs, greenhouse gas emissions (GHGs), energy, water, waste, injury rate and employee turnover. The ranking model was determined by three measures: stock exchange’s score on the disclosure rate (50% weight), the disclosure growth rate (20%) and the disclosure timeliness score (30%).
On the period between 2010-2014, the five years in which the study was conducted, the report registered a 50% increase in GHG disclosure and 23% in energy, waste and water disclosure. Even though GHG emissions are the most reported indicator, more than half of the listed companies evaluated still do not disclose it. Social indicators such as injury and turnover rates had relatively low disclosure, which indicates that companies prioritize environmental indicators over social ones and that there is the need to stimulate disclosure in the latter.
Developed economies continue to lead on disclosure, with the top 3 is composed of Euronext Amsterdam, Euronext Paris and Australian Securities Exchange in ascending order. However, emerging countries seem to be making an effort to close that gap, for they have registered a significant increase in reporting levels in the past year. The stock exchanges in the bottom half of the ranking have historically shown a poor disclosure improvement rate. Only about 20% of countries in the bottom half report on all seven indicators, a relatively small part. In addition, the study suggest that ESG indicators can be used to improve analysis on a company’s financial performance, as higher valued stocks are associated with at least one indicator reported.
SITAWI believes that social and environmental metrics, also known as ESG (Environmental, Social and Governance), implicate both on risks and opportunities for companies, impacting its credit, insurance and investment turnover. With this in mind, SITAWI developed expertise to calculate ESG impact on businesses in order to support institutional investors, banks and insurers decision-making. Get to know more of our work on ESG Research (http://sitawi.net/pesquisa-asg-esg-research/).
*Beatriz Ferrari is an ESG Analyst at SITAWI.