ESG and Corporate Social Responsibility. So far exchanges comprising 44% of world stock market capitalisation have voluntary or mandatory ESG reporting requirements. The Johannesburg stock exchange and Bovespa of Brazil are leaders at embedding reporting standards, but the biggest game changer would be if the US and European exchanges mandated disclosure. While codes of conduct are emerging in both regions it is just a matter of time before this becomes legally binding, driven by investor demands and government requirements.

A three-pronged approach is underway for Environmental, Social, and Governance(ESG) disclosure – exchanges are pushing ESG initiatives, accounting standards are factoring in sustainability, and governments are promoting a ‘report or explain’ mantra. Exchanges mandating disclosure offer the speediest mechanism to full ESG integration, but only if the requirements are meaningful and not simply lip service. The integration of Environmental, Social and Governance (ESG) indicators into financial analysis is finally gaining some momentum, and is expected to increase. Investors have asked for it for years and companies have responded. But confusion over investor requirements and the scope of ESG has resulted in only partial integration into core investment analysis. Three drivers are now shaping the future – exchange requirements, accounting standards and government support.

At Rio +20 a coalition of investors pressed governments to commit to a global convention on sustainability reporting. Instead, governments agreed, in paragraph 47 of ‘the future we want’ conclusion document, that “we acknowledge the importance of corporate sustainability reporting and encourage companies, where appropriate, especially publicly listed and large companies, to consider integrating sustainability information into their reporting cycle. We encourage industry, interested governments as well as relevant stakeholders with the support of the UN system, as appropriate, to develop models for best practice and facilitate action for the integration of sustainability reporting, taking into account the experiences of already existing frameworks, and paying particular attention to the needs of developing countries, including for capacity building”. After the summit the governments of Brazil, Denmark, France and South Africa formed "Friends of Paragraph 47" group to further the agenda. At Rio +20 a coalition of investors pressed governments to commit to a global convention on sustainability reporting. Instead, governments agreed, in paragraph 47 of ‘the future we want’ conclusion document, that “we acknowledge the importance of corporate sustainability reporting and encourage companies, where appropriate, especially publicly listed and large companies, to consider integrating sustainability information into their reporting cycle. We encourage industry, interested governments as well as relevant stakeholders with the support of the UN system, as appropriate, to develop models for best practice and facilitate action for the integration of sustainability reporting, taking into account the experiences of already existing frameworks, and paying particular attention to the needs of developing countries, including for capacity building”. After the summit the governments of Brazil, Denmark, France and South Africa formed "Friends of Paragraph 47" group to further the agenda.