The role of stock exchanges in the transmission of Sustainable Development Goals to enterprises

Abstract

The implementation of the seventeen Sustainable Development Goals (SDGs) formulated under Agenda 2030 requires the involvement not only of states, international agencies, and non-governmental organisations, but also businesses. Due to their unique characteristics, stock exchanges can play a major role in the transmission of those goals to the economy, as the infrastructure they develop (e.g. sustainability indices) affects the behaviours of both investors and companies. The incorporation of the SDGs in the design of those indices would effectively stimulate their diffusion. This chapter discusses the case of the Brazilian stock exchange (Brasil, Bolsa, Balcão), which was one of the first exchanges in the emerging markets and the first one in Latin America to launch its own Corporate Sustainability Index (ISE) in 2005. In the years 2016–2019, the methodology of the index was modified with the SDG engagement of companies being increasingly incorporated in company assessment criteria. Thus, the case study may provide important information about the effects of such an approach on corporate commitment to the SDGs. The presented analysis has some important practical implications for the operators of other sustainability indices, which could use Brazilian experiences in developing their own solutions accommodating the SDGs.