While SSE was "one of the first
stock exchanges to issue a directive for companies to publish a sustainability report," IFC noted,
"Existing frameworks provide guidance that is either too vague or too broad." One way in which
stock exchanges can encourage corporate sustainability reporting, IFC found, is by establishing
sustainability indexes, as has been done in South Africa and Brazil.
This week, SSE
announced that it will launch the SSE Sustainable Development Industry Index and the CSI Commodity
Equity Index on August 22. According to the
Exchange, the three themes of the Sustainable Development Industry Index will be Education and
Publishing, Low Carbon Economy, and Cyclic Economy.
The Low Carbon Economy stocks are
identified by SSE as those of companies engaged in "clean power generation, energy transfer and
storage, clean production and consumption, and water and waste treatment." Cyclic Economy stocks
are engaged in energy efficiency.
The CSI Commodity Equity Index consists of companies in
such resource-intensive industries as Oil & Gas and Metals & Mining. No mention is made in SSE's
methodology of the sustainability reporting requirements of companies included in the Commodity
Equity Index; however, as a member of the World Federation of Exchanges (WFE), it can be expected
that sustainability will play a role in the selection of components for the Index.
2009 report on exchanges
and sustainable investment, WFE noted that the sustainable investment strategies used by its
members include improving environmental, social, and corporate governance (ESG) standards by
companies, increasing the number of products and services for sustainable investors, and creating
specialized markets for specific sustainable investment strategies.