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1 Euronext | Guidelines to Issuers for ESG Reporting ESG REPORTING GUIDELINES T

1 Euronext | Guidelines to Issuers for ESG Reporting ESG REPORTING GUIDELINES TO ISSUERS FOR ESG REPORTING Please print this guide only if necessary to prevent waste and to protect the environment. Available printed copies are made from recycled paper. Euronext | Guidelines to Issuers for ESG Reporting 4 FOREWORD 01 WHAT IS ESG AND WHO IS THIS GUIDANCE FOR? 02 WHY REPORT ON ESG CONSIDERATIONS? 2.1 | SUPPORTING CORPORATE REPUTATION AND STRATEGY 2.2 | ADDRESSING ESG ISSUES AS KEY COMPONENT OF INVESTOR RELATIONS 2.2.1 | IDENTIFYING AND UNDERSTANDING INVESTORS’ ESG INFORMATION NEEDS 2.2.2 | ESG A COMPASS FOR RISK MITIGATION 2.3 | ALIGN YOUR STRATEGY WITH REGULATORY REQUIREMENTS 03 GUIDING PRINCIPLES OF REPORT PREPARATION 3.1 | RESPONSIBILITY AND OVERSIGHT OF THE RECORD 3.2 | RELEVANCE AND MATERIALITY 04 4.2 | IMPLEMENTATION AND OPERATIONAL MANAGEMENT 4.3 | DRAFTING AND PRESENTATION 4.3.1 | QUALITY OF THE INFORMATION 4.3.2 | FORMAT OF THE PRESENTATION 4.3.3 | MAKING YOUR ESG INFORMATION ACCESSIBLE 4.4 | REPORTING AS A CONTINUOUS DIALOGUE 4.5 | ASSESSING & ASSURING 05 USING CAPITAL MARKETS TO IMPLEMENT ESG BUSINESS STRATEGY 5.1 | THE REGULATORY LANDSCAPE OF GREEN BONDS 5.2 | EQUITY FINANCING FOR YOUR TRANSITION 06 EURONEXT AND ITS ROLE IN SUSTAINABILITY 07 APPENDIX 7.1 | KEY ESG REPORTING REGULATIONS 7.2 | REFERENCES TO EXISTING STANDARDS 7.3 | GUIDANCE FOR ISSUERS IN PREPARING THEIR REPORT 7.4 | OBJECTIVES FOR REPORTING ON ESG Summary 12 13 14 14 16 17 22 24 24 27 30 32 33 33 34 35 37 37 38 39 39 40 42 43 47 49 51 6 8 18 19 20 ESG REPORTING PROCESS 4.1 | MATERIALITY ANALYSIS: IDENTIFICATION AND PRIORITISATION 4.1.1 | IDENTIFYING STAKEHOLDERS AND MAPPING THEIR INTERESTS 4.1.2 | IDENTIFYING THE RELEVANT THEMES FOR THE COMPANY (MATERIALITY) 4.1.3 | PRIORITISATION Euronext | Guidelines to Issuers for ESG Reporting 6 7 Euronext | Guidelines to Issuers for ESG Reporting The world is facing significant challenges in ensuring a sustainable future for our people and our planet and many international and international initiatives are addressing them. Acting on increasing concerns worldwide, 195 countries signed the Paris agreement in December 2015 to limit the rise in global temperatures to less than 2°C above pre-industrial levels. The European Green Deal is the first step on this journey, a roadmap that aims to transform the EU’s economy for a sustainable future, including the decoupling of economic growth from resource use. As governments and individuals scale up their efforts and support initiatives to remodel our economies and change our behaviours, every organisation will have its own role to play in the transition to a sustainable society. The financial industry will necessarily be an important contributor to the global sustainability agenda. To promote sustainable finance, the industry should incorporate environmental, social and governance (ESG) factors into investment decision- making, supporting the allocation and channelling of capital towards sustainable and transitioning assets. Leveraging practices and techniques that have been created and enriched over the past 30 years, the financial industry began to incorporate non-financial criteria in the analysis of companies’ performances only a decade ago. This was a first move towards embracing sustainability, but progress requires steep learning curves. To satisfy investors’ expectations of transparency and their increasing awareness of ESG factors, public companies are being incentivised to disclose more information as the stakes become higher. This growth trajectory is demonstrated in recent figures: the Global Sustainable Investment Alliance estimates that in 2018 the total value of all investments managed following an ESG mandate was USD $31 trillion globally. Europe accounts for the largest concentration of sustainable investment assets worldwide, totalling USD $14.1 trillion. As the demand for socially responsible assets grows, ESG reporting is both a fantastic opportunity and a real challenge. It can appear particularly complex for smaller issuers in the absence of a clear set of globally used standards. This ESG guidance has been created to help Euronext listed companies in their interactions with investors and the wider ESG community, to help them understand how to address ESG issues as a key component of investor relations, as well as the main principles to consider when preparing an ESG report. As sustainability evolves alongside the needs of our society and our environment, this guidance will be updated as necessary to continue to be a dynamic support, aligned with the needs of investors. This guidance underlines our commitment to support our customers and promote sustainable finance. We are an official supporter of the United Nations’ Sustainable Stock Exchanges (SSE) initiative, a member of Finance for Tomorrow (the sustainable initiative from Paris Europlace) and have committed to the Task Force on Climate-related Financial Disclosure (TCFD) recommendations. We strive to promote transparency on climate risks and opportunities in the financial markets and are building a growing offering specifically designed to assist issuers in enjoying more visibility as a benefit of their ESG commitment. They say the future of finance is green. It starts with each of us making our own strides forward in our pledge to create a sustainable future. We hope this guidance will inspire your journey toward a more sustainable economy. Anthony Attia and Daryl Byrne, Members of the Euronext Managing Board Foreword Anthony Attia Daryl Byrne Euronext | Guidelines to Issuers for ESG Reporting 8 9 Euronext | Guidelines to Issuers for ESG Reporting Environmental, social and governance principles (ESG) are a set of standards by which a company and its investors can measure the wider impact of its operations and long-term strategy. Companies can integrate environmental1 , social2 and governance3 concerns into their long-term strategy with a view to: Moreover, investors increasingly expect companies to recognise and address, in a responsible way, short- and long-term risks and opportunities in relation to environmental, social and governance factors that impact long-term value creation. For the purpose of this guidance the terms “ESG” and “Sustainability” are therefore used interchangeably, herein encompassing concepts comparable to “corporate responsibility” and “CSR”. making an overall positive contribution achieving sustainable growth avoiding and addressing adverse impacts related to its operations, products or services What is ESG and who is this guidance for? 01 1 Environmental: related to topics that include pollution, carbon emissions and protection of biodiversity. 2 Social: related to topics that include inequalities issues, diversity and human rights. 3 Governance: related to topics that include management processes and transparency “Sustainability” has evolved to refer to strategic and operational considerations related to a broad set of environmental, social and governance concerns. Euronext | Guidelines to Issuers for ESG Reporting 10 11 Euronext | Guidelines to Issuers for ESG Reporting This guidance is intended to help simplify the efforts of companies listed on Euronext to: ■ Identify and prioritise the opportunities and risks of greatest significance to a company results and their most important stakeholders with regards to ESG ■ Report efficiently on their management of and performance in areas of ESG risks defined in accordance with their own needs and those of their stakeholders ■ Navigate, comply with or stay ahead of regulations that require disclosure of financially material ESG information ■ Differentiate themselves on ESG matters and maintain high relevance, which is becoming a competitive imperative The use of the Euronext guidance on ESG reporting is voluntary for companies. Companies that apply the guidance may highlight this by including the following statement in their annual report and/or their separate ESG report: “We follow the Euronext guidance on ESG reporting of January 2020”. Euronext | Guidelines to Issuers for ESG Reporting 12 13 Euronext | Guidelines to Issuers for ESG Reporting The evidence suggests that strong corporate performance on ESG factors correlates positively with improved cost of capital and financial performance. Several studies4 suggest that companies that perform well on material ESG factors significantly outperform peers with poor performance on these issues. In addition to investors, a range of other stakeholders increasingly require information regarding the most significant opportunities and risks to which companies are exposed, and how they manage such issues. Many of the issues covered by the concept of “corporate responsibility” can have significant consequences for a company’s financial performance and value creation over both the short and the long term, as they can affect a company’s access to and cost of capital, market access, brand value, licences and other authorisations required to operate. Reporting on how sustainability initiatives are linked to strategy, financial performance and valuation assists in communicating how a company is addressing some of the world’s most pressing challenges, including poverty, education, climate change and biodiversity. Addressing these challenges promotes more prosperous economic systems that benefit all participants and create more stable and resilient markets within which companies can operate. 2.1 | Supporting corporate reputation and strategy In addition to the benefits of the report itself, a company also derives value from the process of creating a report. While high quality corporate reporting provides useful decision-making information for internal and external stakeholders, the process of compiling this information can also strengthen internal reporting systems. The ESG reporting process itself can uploads/Finance/ euronext-guide.pdf