The London Stock Exchange announced the launch of its Climate Transition Offering, publishing disclosure guidance for issuers on the exchange, aimed at enabling companies to integrate climate risks and opportunities into decision making and report on emissions performance.
The LSE is the first exchange to publish climate reporting guidance based on the Sustainable Stock Exchanges (SSE) initiative’s Model Guidance on Climate Disclosure. SSE is a UN Partnership Programme organised by UNCTAD, the UN Global Compact, UNEP FI and the PRI, with a mission to help enable multiple stakeholders, including investors, companies, regulators, and policymakers to enhance performance on ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. issues and encourage sustainable investment. One of the initiative’s key objectives has been aid exchanges in providing issuers with guidance to foster increased disclosure of ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. information.
The Model Guidance was officially launched in June 2021, following a year-long development initiative between the SSE, London Stock Exchange Group, the Johannesburg Stock Exchange and UN Special Envoy for Climate Action and Finance Mark Carney, and constitutes a workstream aimed at helping exchanges to guide issuers in the implementation of the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD).
Julia Hoggett, CEO, the London Stock Exchange, said:
“Investors are increasingly choosing to allocate capital to companies with clear frameworks for managing climate-related risks and opportunities. While many FTSE 100 companies have already taken a leadership position by committing to net zero by 2050 and before, the London Stock Exchange is home to companies at varying stages of the climate transition.”
The new guidance comes as companies are under increasing pressure to collect on report on sustainability data and performance, particularly related to their climate impact. Earlier this week, the UK published a new “Greening Finance” report, setting out its plans for the greening of the country’s financial system, and laying out the roadmap for the next steps towards mandatory sustainability disclosure.
The LSE also announced Climate GovernanceGovernance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. Scores for over 400 issuers, aimed at helping them understand the key climate metrics that investors are focused on, and compare themselves with peers. The scores, based on the Transition Pathway Initiative’s (TPI) Management Quality Score (MQS) methodology take into account a company’s carbon management practices and incorporation of climate change considerations into their business strategy.
Hoggett said:
“Climate change represents the greatest challenge of our time, and it is essential that the financial market ecosystem supports and stimulates the action necessary across the economy to meet that challenge. Our new Climate Transition Offering launched today will help issuers understand how investor’s view their performance on the transition and facilitate change by providing an action-orientated climate reporting framework aligned with global standards.”
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