Abu Dhabi Securities Exchange (ADX) has issued Environmental Social & Governance (ESG) disclosure guidelines for listed companies.
The launch of this set of 31 Key Performance Indicators (KPIs) is aligned with ADX strategy which is designed to support economic growth, while providing a sustainable trading environment and encouraging the business community to adopt societal sustainability practices. It will also raise the standard of governance, by putting into operation sustainability standards and integrating them into both ADX strategy and listed companies alike.
Khalifa Salem Al Mansouri, Acting Chief Executive of ADX said: “ADX has made a formal commitment to drive sustainability in financial markets by becoming a partner exchange of this United Nations-led ‘The Sustainable Stock Exchanges’ initiative. We have carried out this programme to support our listed issuers in their sustainability reporting journey. The ESG Disclosure Guidance represents a natural evolution of our status as a regional-leading exchange, stemming from ADX’s status as a member of the Sustainability Group in the World Federation of Exchanges.”
The newly-released standards “will enhance ADX’s competitiveness and attract more responsible investments to the Emirate”, according to ADX.
ESG guided principles will also ensure ADX continues to make essential contributions towards promoting sustainability in financial markets, in alignment with the UAE National Vision 2021 and Abu Dhabi Economic Vision 2030. “Companies’ application to the standards of this guide opens the way for investments supported by US$83 trillion in asset allocation from various Asset Management Funds (AMC) directed to companies that apply environmental, social and corporate governance standards,” the Exchange said in a press release.
ADX further stated that according to this voluntary guide, “it reserves the right to update and/or amend, companies must disclose critical environmental, sustainability and governance issues”.
These key core issues can be identified in four phases in accordance with the Global Reporting Initiative (GRI). The first step involves identification. At this stage, the Company identifies all issues related to sustainability that may have potential impacts on the Company’s activities, products, services and relationships occurring within or outside the Company. The next stage is the identification of priorities. At this stage, companies choose the most important topics to report in accordance with the principles of relative importance and stakeholder inclusion. This phase is followed by validation. These steps include assessing the material aspects against the scope of the reports, the limits of each impact, and the reporting period. The review represents the final stage of the identification process. The review follows the publication of the company report to prepare for the next report cycle.
According to the ADX initiative, listed companies are required to submit an independent report on sustainability, as these reports are in line with the GRI standards. “Sustainability reports provide the company’s environmental, social and corporate disclosure content in one place and address environmental and social information needs and governance related to investors and other stakeholders, such as consumers and civil society,” the Exchange noted.
The criteria on which these reports are based are divided into three sets of 31 basic indicators for environmental and social disclosure and corporate governance. ADX will soon hold workshops for all listed companies to clarify these criteria and to explain how to report and respond to queries from companies. Companies listed on the Exchange are expected to release these reports by the end of 2019.