The Ghana Stock Exchange (GSE) is implementing a new system to encourage listed companies to report on environmental, social, and governance (ESG) factors. This initiative aligns with global sustainability standards and aims to make the GSE a more attractive investment destination in Africa.
Phased Implementation Based on Company Size
The GSE’s approach categorizes companies into three groups based on their market capitalization:
- Category A: Top 10-11 companies with the highest market capitalization (mostly multinationals)
- Category B: Next 10 companies
- Category C: All remaining listed companies
This tiered system acknowledges that smaller companies may have fewer resources for comprehensive ESG reporting.
Building on Existing Practices
Larger companies (Category A) are already familiar with ESG reporting and use various recognized standards like GRI, TCFD, and SASB. The GSE encourages them to continue their practices and ensure their reports cover all mandatory ESG topics.
Gradual Integration for Smaller Companies
Category B companies are required to report on at least two or three general ESG topics, while Category C companies start with one topic and gradually add more in subsequent years.
Flexibility and Guidance
The GSE’s ESG reporting manual provides both mandatory and optional topics, along with industry-specific guidelines. This flexibility helps companies adapt without feeling overburdened, while still ensuring comprehensive reporting.
Avoiding Over-Regulation
The GSE prioritizes user-friendliness. The manual is designed to be compatible with other regulations, allowing companies (like banks) to use a single report for both GSE and central bank requirements.
Expected Outcomes
The new ESG reporting system starts with 2023 annual reports. The GSE expects to see companies, especially those without prior experience, dedicate at least one or two pages to ESG factors in their reports.
This initiative is part of a larger project supported by the Global Reporting Initiative (GRI) to promote ESG reporting on African stock exchanges.
