The Ghana Stock Exchange (GSE) has taken a significant step towards sustainability by adopting a tiered environmental, social, and governance (ESG) reporting strategy for its listed companies and stakeholders.

This move aligns with global sustainability standards and aims to enhance GSE’s competitive edge in the African sub-region.

The GSE’s new ESG reporting strategy was revealed by Diana Okine, Head of Strategy and International Relations at GSE, during the ‘Building African Financial Markets’ seminar. This initiative is part of GSE’s broader vision to become a practical sustainable bourse and the preferred platform for investment in the African sub-region.

GSE’s approach categorizes companies into three groups based on market capitalization and readiness for ESG reporting. This stratification ensures a smooth transition to comprehensive ESG reporting across all listed companies.

Category A includes the top 10 or 11 companies with the highest market capitalization. These companies, many of which are multinationals, are already engaged in ESG reporting using frameworks such as the Global Reporting Initiative (GRI), Task Force on Climate-related Financial Disclosures (TCFD), and Sustainability Accounting Standards Board (SASB).

Ms. Okine explained saying, “Most of them are using the GRI. Some of the issuers are reporting using TCFD and SASB in addition to the GRI standards and SDGs, as well as other internationally approved standards.” For these companies, GSE encourages them to continue their reporting while ensuring the inclusion of mandatory topics outlined by GSE.

Meanwhile, category B consists of the next top 10 companies. These companies are required to report on at least two or three general topics, including corporate governance, ethics, corporate strategy, data policy, and environmental policy. This intermediate level of compliance aims to build their capacity gradually.

Moreover, category C includes the remaining companies. GSE has set an initial threshold for these companies to report on at least one ESG topic and gradually add more in subsequent years. This approach acknowledges the varying capacities of companies and allows them to build their reporting capabilities over time.

ESG Reporting Manual: A Flexible Guide

In November 2022, GSE launched its ESG reporting manual, which provides both mandatory and optional topics as well as sector-specific guidelines. This flexibility is designed to make the transition to ESG reporting less burdensome for companies while ensuring comprehensive coverage of ESG issues.

Ms. Okine emphasized the importance of avoiding over-regulation saying “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.”
Diana Okine

The Implementation of ESG reporting is set to begin with the 2023 annual reports, which are 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 stated.

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

By aligning with global standards and fostering a culture of sustainability, GSE aims to position itself as a leader in sustainable investment in the African sub-region.

The Ghana Stock Exchange’s tiered ESG reporting strategy marks a significant milestone in its journey towards sustainability. By categorizing companies based on their market capitalization and readiness, GSE ensures a smooth transition to comprehensive ESG reporting.

This initiative not only aligns with global sustainability standards but also strengthens GSE’s position as a competitive and sustainable investment platform in the African sub-region.

As ESG reporting becomes more integrated into the corporate landscape, GSE’s efforts are poised to drive greater transparency, accountability, and long-term value for investors and stakeholders alike.