NASDAQ’s Sandy Frucher takes stock of corporate reporting

NASDAQ’s Vice Chair Meyer “Sandy” Frucher was a big hit during the Sustainability Accounting Standards Board’s (SASB) spring conference in New York City (as he was at the GreenBiz Forum in January), reminding fellow panelists of common-sense wisdom during an arcane debate on sustainability reporting that pitted accounting standards against regulatory guidelines — and baffled most of the audience.

After a series of nonstop trips spanning four continents in his role as “roving ambassador without a portfolio” — and freshly returned from a board meeting of the Tokyo meeting of the World Federation of Exchanges (WFE) — Frucher sat down with me to talk what makes sense for companies, investors and the public as business embraces sustainability reporting.

Ann Goodman: Why did NASDAQ publish an integrated report last December?

Sandy Frucher:We’re a for-profit company. We used to be a boutique stock exchange in one place trading equities in the U.S. The world changed. We’ve become a global company, a multinational and multi-modal company — that is, we don’t trade a single product — equities — anymore, but also derivatives, options, futures. We morphed from a boutique to a global technology company. As you evolve, your focus and interests evolve.

So now, NASDAQ is more than a complex multinational enterprise. We also have responsibilities as a listing venue and want to be an exemplar of the things we preach, and good governance is at the top of the list. So we found ourselves pursuing the best governance models and took on governance issues regularly and found we were looking in an integrated area and sustainability issues. So we committed ourselves to clean up our own house. It’s happened over the last couple of years, with a focused and sustained effort.

Goodman: What is NASDAQ’s role in sustainability?

Frucher:我们给我们的上市公司和罗的建议ok at broad issues. Internally, in terms of environmental issues, we’ve become CO₂neutral in some areas, such as the Nordics, and we’ve started to have an integrated reporting system. We have audit, risk committees, separation of CEO and chair functions. We follow good and prescribed governance standards, and we’re working very hard on the financial reporting side of it. We joined the UN initiative onSustainable Stock Exchangesand we were among the first North American exchange to join the UN Global Compact. We’re not fully integrating in reporting but working towards it.

Goodman: How did NASDAQ manage to keep the report to 32 pages when there is so much demanded of companies and readers in the GRI and other guidelines — and even more information to be put in an integrated report?

Frucher:There's a long and a short answer here.

Short: In the first go-round, we focused on the key metrics and disclosures that were most valuable to our customers, investors and stakeholders. We did not want to obscure relevant facts in a sea of less vital data.

Long: We have much more data than we eventually decided to disclose. In the end, we — like all companies on this journey — have to build an internal culture that embraces that kind of public exposure. And I would only include data that I could independently verify; we were very scrupulous in the disclosures, and if anything didn't seem right for any reason, we took it out. The thought was that we would re-verify and put it in the next report. 


Goodman: Why do an integrated report?

Frucher:We’re using as a model accounting functions, and data collection is very complicated and expensive. These are issues that are both corporate issues and often driven by the individual’s own perspective. For instance, our CEO built a green house.

因此，在SASB会议上，我被放置在会计准则的角度和法律角度SEC之间。一个说标准是“可能”，对方说这是“会的。”我说的标准应该是“应该”：这些事情是应该做的。我们是一个稳压器，一个SRO [自律组织。并与前来的法律标准，你应该遵循的道德标准。所以，与其争论什么是正确的事情，我们正在做的事情我们认为是正确的我们自己和我们的公司。这是最好的尝试自己先实现你的标准[需要别人之前。]

Goodman: What are some of the “shoulds”?

Frucher:有很多的可持续发展目标。必威体育2018在财务方面，他们是显而易见的。在非财务方面，他们是很好的生意。例如，在人力资源：适当的报酬，善待员工很好。而除此之外，还有社会义务;我们有一个基础，专注于金融知识，但我们也资助指导美国和在我们自己的组织指导。

问题的关键是，是你必须是一个好公民一个良好的公司。要通过你的投资者做正确的事情是你所在的社区做正确的事。我们不认为讲课的人是如何让他们跟着，而是通过实例比较领先的。

Goodman: You mentioned that NASDAQ is now global. What are some sustainability issues you’ve observed recently in your role as “roving ambassador”?

Frucher:On a global level, sustainability is helping [to improve reporting standards]. As part of WFE we should try to influence regulators [around the world], not by having single entities step up, but as a group.

Plus, listings are a globally competitive business. Besides NASDAQ, there’s London, Frankfurt and Hong Kong, which was the leading IPO venue in the world for the last few years. So it’s a competitive business, and you have to bring the whole world of exchanges in one direction and get a unified approach to regulators to bring about global sustainability. It’s not easy, because there are lots of folks involved. People are looking at environmental issues on a global scale. An exchange in an emerging country has different priorities than in developed countries. You certainly want those countries to be more environmentally sensitive, but they have a [legitimate] argument about the pace of development.

Goodman: Could you give a couple of concrete examples?

Frucher:For instance, in China — I think issues like recycling are far ahead. At the same time they’re putting one more power plant up all the time because of their needs, and it’s pretty ugly. When I was in Japan at WFE, there was a report from China that the air quality in Beijing costs citizens 5.5 years of life expectancy. So there’s growing recognition of the need to make progress on environmental needs. They’re surpassing us on alternative energy but building more power plants.

That translates to reporting and listing. Chinese exchanges are very supportive of the issues, but I don’t think they can unilaterally impose the standards. But if there are global standards, there would be a lot of support because that transcends international conflict. But it’s hard to do because: for one thing, [listing standards] are generally contentious issues, and another thing — and this is why SASB is so important — how much can you impose on companies, especially small ones, on the reporting side? They have so many demands.

Goodman: You were also recently in Turkey. What are your impressions?

Frucher:在伊斯坦布尔证交所是六个初始驱动力之一得到交流，签署了联合国全球契约。其主席是美好的，别人谁了解的可持续性问题的经济学的一个例子。必威体育2018他是2号人土耳其中央银行。前面的他，这种交流已经捐赠随着时间的推移亿万建设学校;这是一个了不起的例子。土耳其从宗教的角度来看是穆斯林，但世俗的和值都有不俗的表现。就是我喜欢目前的头，易卜拉欣TURHAN，是他的人谁懂值结构以及经济性。他已经可持续性的一个很直率的支持者。必威体育2018

Goodman: What are some of the pluses and minuses of seemingly endless sustainability reporting guidelines and standards?

Frucher:For one thing, if you layer and layer on layers of reporting, without looking at the totality, and without looking at what’s relevant to investors, companies will become privately listed. Those are issues stock exchanges must look at for competitive reasons, but also we risk [diminishing public good].

With public markets comes lots of transparency, which is very important for society. A case in point: the current economic crisis — all the unlisted products that brought us to our knees in this economy. So the transparency of public markets limits the risk. We don’t have a clue with private markets. The only way you find out is when the proverbial hits the fan.

So if we overburden the public markets, with a never-ending stream of reporting, companies will be driven away. Small companies, entrepreneurs, innovators won’t be able to sustain the cost and work of reporting and will seek other means.

There’s a balance, and I don’t believe it’s just self-serving. I believe in the gamut of sustainability, but within it, there has to be reasonableness and affordability. Otherwise you get less rather than more.

Goodman: Do you have any guidance or suggestions for companies as they navigate increasingly complex areas of reporting that can’t be easily quantified?

Frucher:The first and most important is whether there’s commitment at the top. So you have to get committed people to carry the ball first.

The other thing is that one has to recognize that a lot of this is incremental, not revolutionary but evolutionary. It requires vision, persistence, commitment and advocacy. So the people who don’t immediately change need to be there and the people charged with getting it done have to do it with consistent, step-by-step coalition building.

You have to convince a corporation with fiduciary responsibility that it makes financial and moral sense. So you need committed people to do everything.

我在可持续发展的社区做的是必威体育2018将矛头指向：它的罚款交流发展绿色指标，所以为什么没有人贸易中的绿色指标？这很难让人们去这样做。我挑战很多公共养老基金，谁是他们的承诺很清楚，乐于助人在得到企业的变化。但它可能是更有效地投资于绿色指数？

古德曼：什么是纳斯达克的下一个目标？

Frucher:There’s a WFE meeting in October in Mexico City. There are some very complicated issues, but I’m hopeful.

The good news looking ahead is GRI and others have put together standards — and the bad news is they’ve put together standards. It’s easier to sell a dream than a road map. The road map introduces a lot of complexities.

Image courtesy NASDAQ OMX