The Ghana Stock Exchange (GSE) has adopted and is implementing a tiered environmental, social and governance (ESG) reporting strategy for its listed companies and stakeholders, aligning with global sustainability standards and boosting its competitive edge.

This initiative, part of GSE’s vision to be a practical sustainable bourse and the preferred platform for investment in the African sub-region, was revealed by Diana Okine, Head-Strategy and International Relations, GSE, during the recent ‘Building African Financial Markets’ seminar in South Africa.

GSE’s approach categorises companies into three groups based on market capitalisation and readiness, ensuring a smooth transition to comprehensive ESG reporting.

“What we did was categorise them into three groups using market capitalisation. The top 10 or 11 companies with highest market capitalisation, the next top 10 and then the rest. So, we have a sort of category A, B, C,” Ms. Okine explained.

This stratified implementation acknowledges the varying capacities of listed companies to adopt ESG reporting practices. The top-tier companies, many of which are multinationals, were found to be already reporting on ESG matters.

“Most of them are using the GRI (Global Reporting Initiative). Some of the issuers are reporting using TCFD (Task Force on Climate-related Financial Disclosures) and SASB (Sustainability Accounting Standards Board) in addition to the GRI standards and SDGs, as well as other internationally approved standards,” Ms. Okine noted.

For these Category A companies, GSE’s approach is to build on existing practices. “We encouraged them to go ahead with their reports but ensure that the report included missing items on the mandatory topics GSE has provided, ” Ms. Okine stated.

Category B companies are required to report on at least two or three general topics – including corporate governance, ethics, corporate strategy, data policy and environmental policy. For Category C, GSE has set an initial threshold of reporting on at least one ESG topic and adding on in subsequent years.

GSE’s ESG reporting manual, launched in November 2022, provides both mandatory and optional topics as well as sector-specific guidelines. This flexibility aims to make the transition less burdensome for companies while ensuring comprehensive reporting on ESG issues.

She emphasised GSE’s efforts to avoid over-regulation: “We don’t want over-regulation or to make it difficult for issuers to comply with the guidelines. We therefore designed the manual to enable compliance with multiple regulatory requirements. For instance, a listed bank can use one report to meet both BoG and GSE sustainability reporting requirements.

Implementing ESG reporting is set to begin with the 2023 annual reports, due to be released this year. “We are expecting that one or two pages will appear in most annual reports of listed companies, especially those who were not reporting before,” Ms. Okine said.

This initiative is part of a broader project funded by the Global Reporting Initiative (GRI), which selected Ghana Stock Exchange alongside exchanges in Kenya and Eswatini for ESG reporting development.