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Sri Lanka stock exchange to launch sustainability index

ECONOMYNEXT- The Colombo Stock Exchange (CSE) will be launching a new index for listed firms in Sri Lanka which have the best environment, social, and governance (ESG) sustainable disclosures, a top official said.

 "Will will be launching an ESG Index," CSE Research and New Products Head Nishantha Hewavithana said.
 
The groundwork for the new index is already complete, and CSE is evaluating the correct time to launch it, he said.
 
He was speaking at a forum organized by the CSE and GRI (Global Reporting Initiative) on sustainable reporting.
 
"The constituents are companies with a high level of disclosure," Hewavithana said.
 
"In addition to size and liquidity, there will be an ESG score for disclosure with a maximum score of 800," he said.
 
He said the index will be formed under Standard and Poor Dow Jones Indices criteria, and will include 20 firms.
 
GRI has separate ESG reporting criteria, which if followed may also lead to a higher ESG score, Hewavithana said.
 
GRI chief executive Tim Mohim said companies with higher ESG disclosures have higher earnings per share, and return on equity.
 
"Some may say it’s a correlation and not causation, but it has happened over a number of years," he said.
 
"Better managed companies would measure these (ESG) issues."
 
Mohim said 93 percent of the largest 250 listed firms in the world disclose their ESG indicators, with 75 percent also disclosing under GRI criteria.
 
The 75 percent of the 100 largest first in 49 countries disclose ESG indicators, with 63 percent disclosing under GRI.
 
He said in Sri Lanka, 100 firms make GRI reports, out of 297.
 
The CSE is a part of the United Nations Sustainable Stock Exchanges initiative. (Colombo/Mar28/2019-SB)