Sustainable stock exchanges: a new choice for investors

In November 2009, in a small room at the United Nations in New York, a group of the world’s most powerful financiers gathered to discuss something close to their hearts: stock markets.

However rather than talking about capital driven considerations, such as cash flows and profit maximisation, their focus was on promoting environmental and social considerations as criteria for sound investments.

This is because the meeting was hosted by the United Nations Principles of Responsible Investment (PRI) and most of the meeting’s attendees were signatories to the scheme. Its focus was how signatories could fulfil the third of PRI’s six principles: to seek environmental, social and governance (ESG) disclosure from the companies in which they invest. ESG is the twin of the more widely known Corporate Social Responsibility (CSR). While CSR is the disclosure of information by a company, ESG is the criteria against which investment decisions should be made. The two do not correlate exactly, but they certainly work hand in hand.

Many investors in the Socially Responsible Investment (SRI) community had previously thought CSR disclosure...

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