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PNG stock exchange consults on ESG code

consultation
If the standards are adopted, companies will need to disclose policies put in place to reduce incidents of domestic and gender-based violence. (Photo: Wutwhanfoto/iStock)

The public consultation aims to deliver lasting change across Papua New Guinea’s wider economy by setting new corporate governance standards, including a recommendation on tackling gender-based violence.

Papua New Guinea’s national stock exchange (PNGX) is consulting on a new corporate governance code that will introduce environmental, social and governance standards for listed issuers, including novel recommendations to tackle violence against women. The proposals were drafted with the assistance of the International Finance Corporation and the UN Sustainable Stock Exchanges initiative. 

PNGX’s public consultation represents a step change for the resource-dominated frontier market that, according to the World Bank, remains one of the hardest places in the world to do business. It is hoped that new corporate governance standards will deliver lasting change across the wider economy by setting new benchmarks for business conduct, transparency and sustainability.

“PNGX is in a unique situation to influence corporate governance and ESG standards because if you get companies to report publicly, that then sets a benchmark not just for listed issuers, but also those companies [wanting to list], as well as other large private sector businesses. So it permeates down through the corporate world,” says PNGX chair David Lawrence. 

Included in the new standards is a recommendation on gender-based violence. If adopted, listed companies will be encouraged to disclose the policies put in place to reduce incidents of domestic and gender-based violence and their effect on the company.

Papua New Guinea suffers from an epidemic of violence against women, with about 60 per cent of women aged 15-49 having suffered from a form of physical sexual violence, according to the UN. 

Return-to-work recommendations

PNGX’s consultation also includes a recommendation that companies should disclose the extent of their “return-to-work” policies for employees engaged with family duties. This could incorporate flexible working arrangements, work from home guidelines, or childcare arrangements, among other examples. 

“The gender-based violence and the return-to-work recommendations are probably among the first of their kind in the [Australasia] region or even internationally,” Lawrence said. “Certainly, the feedback we’ve had from the IFC and others in this space is that these standards are a big step forwards for corporate governance anywhere in the world.”

Meanwhile, a further recommendation is that 25 per cent of a company’s board directors should be people identifying as women. “For a country like Papua New Guinea, that’s a big step. It’s not going to be easily attainable, but it’s a big step forward,” Lawrence adds. 

PNGX’s corporate governance standards will be issued on a voluntary basis, although the code will operate on an “if not, why not” or “apply or explain” disclosure methodology. Over time, this could put pressure on smaller companies that may lack the reporting resources to comply with the new standards.

The public consultation period runs from March 3 for two months, before the final version of the code is implemented later this year. 

A service from the Financial Times