Boosting global competitiveness of Ghanaian companies — GSE introduces ESG Disclosures Guidance Manual
Businesses across the world have moved beyond just profitability and are now focusing on the impact of their operations on the larger community.
This new direction, however, requires transparency at all times with various stakeholders in the know of whatever is being done.
There is a strong call for businesses to be more responsible and transparent with their operations to positively impact the environment, society and corporate governance.
Sustainability reporting has been embraced by organisations in various sectors to contribute towards the campaign for a sustainable world to be bequeathed to the next generation.
Sustainability reporting helps companies communicate both positive and negative impacts of their actions on the environment, society as well as the economy, and accordingly set priorities.
Governments, market regulators, stock exchanges, civil society, and other stakeholders continue to place huge demands on companies to get information on the impact of their sustainability programmes across the globe.
With the call for sustainability reporting growing, the Ghana Stock Exchange, with support from Seven Levers, Global Reporting Initiative (GRI) and Swiss State Secretariat for Economic Affairs (SECO), has taken a proactive step and launched Environmental, Social, Governance (ESG) Disclosures Guidance Manual for listed companies on the local bourse.
This is to help these companies to embrace ESG goals in order to boost their global competitiveness.
At the launch of the manual, the outgoing Managing Director of GSE, Ekow Afedzie, said the exchange would incorporate ESG guidelines into its listing requirements from 2023.
He said the exchange was in the process of reviewing its listing requirements and one of the things being considered was the incorporation of ESG guidelines into the rules.
He said the manual would enable listed Firms collect, analyse and publicly disclose important ESG information using an approach that meets international standards in sustainability reporting.
“This manual will actually guide companies when it comes to reporting along the ESG guidelines. And the ESG is about Environmental, Social and other issues associated. All we are saying is that, once the regulator approved these guidelines, we do some training then after that we introduce this requirement into our listing obligations for listed companies.”
“In other words, listed companies will now have to report some other things than financials. So next year, we make sure that as we review our listing rules we include some of these requirements,” he stated.
Expected benefits for listed companies
Transparency in ESG disclosures helps in building integrity and trust in the capital markets thus enhancing competitiveness to attract investment to the capital markets.
Adoption and promotion of ESG reporting by the GSE would therefore enhance trust and integrity of the capital markets in Ghana by providing valuable information that is of increasing importance to investors, thus contributing to more efficient capital allocation.
Integrating and disclosing ESG performance by listed companies in Ghana would help investors to assess and preferentially invest in issuers that demonstrate better ESG linked financial performance, resulting in more efficient capital allocation.
It would also help organisations that demonstrate responsible investment practices to access new sources of capital from sustainability conscious investors such as Development Finance Institutions (DFIs) and Private Equity firms.
The ESG value creation framework also helps organisations to proactively address non-financial but critical environmental and social risks, thereby preserving and creating long-term value for stakeholders.
The incoming Managing Director of the GSE, Abena Amoah, for her part, said while the milestone requires the GSE to meet a number of regulatory requirements, it had proceeded on this path as it was acutely aware of the benefits to its operations and that of listed firms.
“It is well-known fact that businesses across the globe have moved beyond solely focusing on financial metrics in performance evaluation, and are now focusing on both the positive and negative impacts of their operations on the environment.”
The GSE is thankful to our partners for their support in producing this ESG guide that helps Ghanaian companies be more accountable for the impact of their businesses,” she stated.
Guidelines are critical
Deputy Director-General Legal at the Securities and Exchange Commission (SEC), Deborah Agyemfra, said implementing the guidelines was critical in the Commission’s market expansion goals as outlined in the 10-year Capital Market Master Plan.
She said the launch of the guidelines would lead to enhanced transparency on the market.
“For us as regulators, we want everything to be transparent and fair; and once there is a guideline it makes our work easier, and will consolidate the strong foundation that has been laid,” she stated.
Also speaking at the launch, the Director of GRI Africa, Douglas Kativu, said the GSE’s initiative was consistent with global best practices – which have seen the role of stock markets expand to include policies and instruments that are designed to promote responsible business conduct and sustainable practices.
He said the move would be crucial for GSE’s credibility and efficiency.
“Without transparency, there is no trust; and without trust, markets will not function efficiently and institutions will lose their credibility,” he said.