Stock exchanges from Malaysia (Bursa Malaysia Berhad), Indonesia (Indonesia Stock Exchange), Thailand (The Stock Exchange of Thailand), and Singapore (Singapore Exchange) have announced to have jointly set up the ASEAN-Interconnected Sustainability Ecosystem (ASEAN-ISE).
The aim of ASEASN-ISE is “to advance ASEAN’s sustainable development through the implementation of common ESG metrics in their respective data infrastructures”. Under ASEAN-ISE, an interregional ecosystem will be set up to facilitate their respective ESG-compliant companies to maximise business value.
Proposed initiatives aim to enhance cross-border trade infrastructure, link corporate supply chains to ESG-focused investment capital, and offer suppliers ESG guidance for improved financing rates.
A key aspect of the ASEAN-ISE is the use of the ‘ASEAN Exchanges Common ESG Metrics’ on their respective ESG reporting platforms. Therefore, the four exchanges will be aligned on how to express certain metrics on the ESG spectrum.
This includes environmental metrics, such as greenhouse gas emissions to be expressed as absolute Scope 1 and 2 emissions, social metrics such as required human rights and non-discrimination policies, and governance metrics such as the percentage of board seats occupied by men and women respectively.
Each of the four exchanges has agreed to certain deliverables under the collaboration, that were set taking into account the exchange’s local considerations and maturity.
Iman Rachman, President Director of the Indonesia Stock Exchange, said that ASEAN-ISE, with the inclusion of Singapore, will encourage “responsible business practices among listed companies in ASEAN stock exchanges”. CEO of Singapore Exchange, Loh Boon Chye, adds that the collaboration will “reinforce our collective efforts to drive capital towards sustainability efforts and address climate change in the region.
According to the United Nations Environment Program (UNEP), Stock Exchanges have an important role to play in addressing market short-termism, which causes companies to neglect long-term ESG considerations, particularly with regard to sustainability efforts. Stock exchanges have expressed that they were hesitant in the past to implement disclosure requirements out of concern that this would reduce their attractiveness and competitiveness as an exchange. By choosing to collaborate, the four exchanges demonstrated their shared commitment to advance sustainable development over competition.
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