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Exchange to implement Environmental, Social, and Governance (ESG) reporting standards by the end of the year

(GSE) to establish specific standards for Environmental, Social, and Governance (ESG) disclosure

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Exchange to Implement Environmental, Social, and Governance Reporting Standards by Year's End
Exchange to Implement Environmental, Social, and Governance Reporting Standards by Year's End

Exchange to implement Environmental, Social, and Governance (ESG) reporting standards by the end of the year

Revamped Article:

The Ghana Stock Exchange (GSE) is gearing up to roll out dedicated ESG reporting standards for listed companies by year's end, as per its Deputy Managing Director Abena Amoah's assertion. This step is an additional stride toward deepening the operations of the Accra bourse and boosting corporate transparency.

During a Facts Behind the Figures session, Ms. Amoah confirmed that the new reporting standard would not be mandatory for all issuers but expressed optimism that it would standardize and enhance the practice of ESG reporting among companies. She added that a significant number of firms are already reporting on ESG-related issues.

Investors increasingly value ESG factors, making them a significant determinant of investment strategies. The growing concern over ESG issues has been reflected in PwC's 2021 Global Investor ESG Survey, in which more than half of the investors surveyed expressed a willingness to divest from companies that do not satisfactorily address ESG issues. However, the survey highlighted concerns over inconsistencies in existing ESG reporting frameworks, advocating for a unified global reporting standard.

When implemented, the GSE will join over 60 stock exchanges worldwide that provide guidance on ESG reporting, such as the United Nations Sustainable Stock Exchanges (SSE). Some issuers, including Unilever, have already shown a shift toward renewable energy sources for their operations.

Last year, the Securities and Exchange Commission (SEC) signed an agreement with the International Finance Corporation (IFC) to develop and introduce green bonds in the country. The move is aimed at deepening the market, ensuring sustainability, and delivering value for investors.

ESG Guidelines Overview:

The new ESG reporting guidelines at the GSE follow international standards while catering to local requirements. Key aspects of the guidelines include:

  1. Embracing International Standards:
  2. IFRS Sustainability Disclosure Standards (ISSB Standards) are essential for annual reporting periods beginning on or after 1 January 2027, as mandated by the Institute of Chartered Accountants, Ghana.
  3. Listed entities may also use the Global Reporting Initiative (GRI) Standards for ESG reporting, although ISSB Standards take precedence.
  4. Additional Disclosures:
  5. Companies may provide additional disclosures within their sustainability report, but these should not hinder information required by ISSB Standards.
  6. Supplementary information must be clearly identified to avoid confusion with mandatory ISSB disclosures.
  7. Directors’ Responsibilities:
  8. Companies must include a statement of directors' responsibilities regarding sustainability-related financial disclosures in their annual report.
  9. The sustainability-related financial disclosures section in the annual report must be signed by two directors and the Chief Sustainability Officer (or a designated alternative).
  10. Assurance Requirements:
  11. The level of assurance over sustainability-related disclosures is not yet formally required but is expected to be mandated in the second year of ISSB Standards application.
  12. Digital Reporting:
  13. There is currently no requirement for digital reporting of sustainability-related disclosures.

Additional ESG Initiatives:

  • ESG-Linked Instruments: The GSE is considering the issuance of ESG-linked commercial paper to attract sustainability-oriented investors and align with global green and social finance trends.
  • Market Transparency and Analytics: The GSE aims to improve data availability and analytics to enhance pricing transparency and support investor decision-making.

These guidelines aim to align the GSE and listed companies in Ghana with global best practices in ESG reporting while addressing local market needs. As further developments unfold, listed companies will be well-positioned to meet evolving investor demands for transparency and sustainability.

  1. The Ghana Stock Exchange (GSE) is preparing to establish ESG reporting standards for listed companies by the end of the year, focusing on international standards and local requirements.
  2. Abena Amoah, the Deputy Managing Director of the GSE, confirmed that while the new reporting standard won't be mandatory for all issuers, it aims to standardize and improve ESG reporting among companies.
  3. Investors increasingly prioritize ESG factors in their investment strategies, with a substantial number expressing a willingness to divest from companies that do not adequately address ESG issues.
  4. When implemented, the GSE will join over 60 stock exchanges worldwide providing guidance on ESG reporting, such as the United Nations Sustainable Stock Exchanges (SSE).
  5. Last year, the Securities and Exchange Commission (SEC) collaborated with the International Finance Corporation (IFC) to develop and introduce green bonds in the country, aiming to deepen the market, ensure sustainability, and provide value for investors.
  6. To stay competitive and meet evolving investor demands, Ghanaian companies may also consider ESG-linked instruments and improved data availability and analytics to attract sustainability-oriented investors and align with global green and social finance trends.

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