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May 27, 2009
World's Largest Stock Exchange Will Provide ESG Information to Its Listed Companies
    by Robert Kropp

Collaboration of NYSE Euronext and ASSET4 will provide companies listed on the exchange with access to ASSET4's database of ESG information on 2,800 of the world's largest companies.


The argument that consideration of environmental, social, and governance (ESG) issues is essential in order to build a sustainable recovery from the current economic crisis—an argument advanced by sustainability investors and others—received significant corporate support recently, when NYSE Euronext, the world's largest exchange group, announced a collaboration with ASSET4, a Swiss-based investment research information provider that provides information on ESG aspects of corporate performance.

NYSE Euronext's equities markets, consisting of the New York Stock Exchange, Euronext, NYSE Arco, and NYSE Amex, include more than 8,000 listed issues worldwide, representing almost 40% of the world's cash equities trading volume.

Under the agreement, NYSE Euronext becomes the first major stock exchange in the world to provide ASSET4's assetmasterExecutive product to a number of its listed companies. The product is designed to allow corporate executives to manage their corporate social responsibility (CSR) strategies with increased accuracy.

NYSE Euronext told SocialFunds.com that because ESG has long been a hot topic among publicly traded companies, and much more so recently, its customers are looking for ways to measure their performance in the three ESG pillars. ASSET4's product gives companies an accurate idea of how they and their peers measure up. The increased attention to carbon trading activities occurring at present was a factor in the Exchange's selection of the assetmasterExecutive product as well.

ASSET4's assetmasterExecutive product is designed for corporate executives, board members, CSR managers, investor relations and corporate communication professionals. The product enables corporate users to reduce risk, improve corporate governance, increase accountability, and attract investment.

The system includes 90 industry-specific key performance indicators for corporate management of ESG performance. The corporate information included is viewed in comparison to a customized benchmark of peers. The product also includes a news tracking capability that gives users access to up-to-date stories on ESG issues.

SocialFunds.com spoke with Peter Ohnemus, CEO and President of ASSET4.

"I started ASSET4 because I was concerned that extra-financial information was hard to come by in the mainstream information services," Ohnemus said. "It became clear to me that we needed to find a way to benchmark companies against their ESG performance."

Ohnemus continued, "The NYSE deal is a major breakthrough for anyone who believes ESG issues are important. NYSE Euronext is the first stock exchange in the world to use our database of information on the world's 2,800 largest companies, broken down into 90 key performance indicators."

The assetmasterExecutive system builds upon the success of ASSET4's assetmasterProfessional system, which is designed for use by institutional investors.

"Our product is very easy to use," he continued. "You don't have to be an analyst. We have built our system in an objective way, and provide our users with links to the sources we use to compile our data."

Asked by SocialFunds.com if the current economic crisis has increased corporate interest in information on ESG issues, Ohnemus responded, "Absolutely. Recently, 150 asset owners attended a conference at which I spoke. Two or three years ago, half of them would have gone out for coffee. Regulatory actions are becoming much more clearly defined, and companies cannot afford to ignore them. Also, the days of blind proxy voting are over for pension funds, and active ownership has become a necessity."

Ohnemus continued, "Companies are very concerned about defining their stand on carbon emissions, knowing that President Obama is determined to introduce cap-and-trade regulations in the US."

In November 2008, the Global Reporting Initiative (GRI) responded to the global economic crisis by calling on governments to take steps to avoid the re-occurrence of such conditions as those that led to the crisis.

Arguing that the root causes of the current economic crisis would have been moderated by a global transparency and accountability system, the Board of Directors at GRI called on governments to introduce policies requiring companies to report on ESG factors, to require ESG reporting by such public bodies as state-owned companies, government pension funds, and public investment agencies, and to integrate sustainability reporting within an emerging global financial regulatory framework.

In addition, six umbrella organizations for the global sustainable and responsible finance industry, including the European Sustainable Investment Forum (Eurosif), the Social Investment Forum, and the Social Investment Organization (SIO) recently called on world leaders to seize the current economic crisis as an opportunity for transitioning to a low-carbon, resource efficient, and socially sustainable global economy.

"The mainstream is blending with responsible investing to create a widespread value-based paradigm," Ohnemus said.

 

 
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