London Stock Exchange Group publishes ESG guidance

The London Stock Exchange Group (LSEG) has issued guidance, through its Global Sustainable Investment Centre, setting out recommendations for good practice in Environmental, Social and Governance (ESG) reporting.

The LSEG said that the global guide responded to demand from investors for a more consistent approach to ESG reporting, which it said is now a core part of the investment decision process. This guide is available on-line to both issuers and investors and has also been sent to more than 2,700 companies that have securities listed on LSEG’s UK and Italian markets with a combined market capitalisation of more than £5 trillion.

Raffaele Jerusalmi, chief executive of Borsa Italiana and director of capital markets, LSEG said: “London Stock Exchange Group is a diverse markets infrastructure group that operates a broad range of international equity, ETF, bond and derivatives markets. This guide is specifically focused on improving the dialogue and information flows between issuers and investors, which will in turn benefit the market as a whole, as good practice in ESG becomes more and more relevant in the investment chain.”

The report’s intention is to help companies gain a clear understanding of what ESG information investors would like to see provided by companies.  Over the past year, the LSEG said it had spoken to companies of all sizes listed on London Stock Exchange and Borsa Italiana and FTSE Russell has engaged with asset owners and asset managers to understand the key challenges that face the industry in regards to ESG reporting.

As Manifest’s Say on Sustainability research service demonstrates, the quality of governance and disclosures produced by companies varies considerably, with report timeliness of particular concern. Over 60% of sustainability reports are at least one year out of date with over 10% lagging by two or more years.

LSEG’s said that its guidance builds on market standards such as the Financial Stability Board’s (FSB) Task Force on Climate-Related Financial Disclosures report and the UN Sustainable Development Goals.

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