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SPECIAL FEATURE


deep, efficient and transparent global capital markets with offerings that speak to investors in sustainable products. This involves a multitude of players. Global market regulators need to take steps to encourage sustainable finance and strengthen ESG practices, disclosure and transparency. Stock exchanges and regulators must produce ESG disclosure rules that meet local and international best practices. Companies that have better practices will gain better access to debt and equity financing, which can ultimately contribute to meeting the SDGs. IFC is collaborating with the United Nations Sustainable Stock Exchanges Initiative (UN SSE) to assist stock exchanges in emerging markets to develop better ESG disclosure regulation and we have seen some early promising results – several countries have launched national ESG reporting guidelines, using our tools. Among them are Kenya, Rwanda, Peru, Georgia, the Philippines, Iraq and Kazakhstan.


OFQ: How does an event such as the current pandemic affect ESG-ratings and capabilities? MPP: Regarding ESG ratings, their use


had been increasing exponentially before the COVID-19 pandemic. It’s far from slowed, and has arguably increased, with numerous initiatives launched in recent months. For example, the Institutional Shareholder Services group of companies (ISS) launched an ESG Fund Ratings in August this year to rank global funds by their ESG characteristics and performance. Similarly, Morningstar launched an ESG Screener to compare funds according to ESG policies and financial performance based on its sustainability rating. The rating ranks funds and Exchange Traded Funds by the ESG ratings of their portfolios using data from its Sustainalytics unit, which also expanded its publicly available corporate ESG ratings to more issuers in July.3


In September, the


International Federation of Accountants issued a statement calling for a new sustainability standards board alongside the International Accounting Standards Board, which promulgates International Financial Reporting Standards to improve ESG reporting.4 Regarding ESG capabilities, just as we individuals have each faced unchartered territory in our daily lives due to the pandemic, the same is true for


businesses. After managing the impacts of the initial lockdowns, companies have quickly turned their attention to longer-term measures to operate in a ‘new normal’, which requires shifting strategies and approaches to remain viable. Companies have needed to look beyond shareholders and consider their stakeholders. They had to deliver value, namely to their customers; build on the capacities of their employees; deal fairly with suppliers and other business partners; support local communities in which they work; and protect the environment. Research has shown, even pre-COVID, companies that adopt stakeholder-oriented approaches deliver stronger financial performance, especially during times of crisis. IFC is committed to helping companies


improve their ESG and become more investable. In addition to fast tracking support to private companies as part of our pandemic response, we have issued specific ESG COVID-19 advice for companies to utilize in these difficult times. With this assistance, we hope to see long-term what we have seen initially: companies with better ESG practices will be more resilient for this and future crises.


1 See UNCTAD 2020 World Investment Report, p. xv, available at: <https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2769> 2


3


Available at: <https://www.morningstar.com/esg-screener#?filtersSelectedValue=%7B%7D&page=1&perPage=10&sortField=legalName&sor- tOrder=asc&universeId=FOUSA>


4


See, Enhancing Corporate Reporting: The Way Forward available at: <https://www.ifac.org/knowledge-gateway/contributing-global-economy/ discussion/enhancing-corporate-reporting-way-forward>


11


See https://www.ifc.org/wps/wcm/connect/31cb3cf3-7414-4841-89bd-4facce991270/Disclosure_and_Transparency_Toolkit_Fact_Sheet_Mar2019. pdf?MOD=AJPERES&CVID=mCsqW5Y?


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