NEW YORK—Institutional investors and chief executives around the world have become aware of the necessity of establishing environmental, social, and corporate governance (ESG) indices to better manage risks, protect transparency, and safeguard long-term returns, according to the United Nations-backed Principles for Responsible Investment Initiative (PRI).

James Gifford, executive director of the PRI, said, “Any moves to improve corporate disclosure on ESG issues are likely to benefit [stock] exchanges through enhancing both the reputation of markets and the investability of the companies traded on them.”

The UN-backed PRI is a set of voluntary actions for incorporating ESG issues into mainstream investment decision-making and ownership practices that today include more than 600 institutional investors with assets of over $18 trillion.

More than 60 top executives from around the world gathered on Monday at the UN headquarters in New York to explore how the world’s exchanges can work together with investors and regulators to encourage responsible long-term approaches to investment. The meeting is cohosted by the Global Compact, the UN Conference on Trade and Development (Unctad) and the PRI.

In a video message, UN Secretary-General Ban Ki-moon welcomed the steps already undertaken by participants to incorporate ESG considerations into new stock indexes, listing rules, and regulatory frameworks, and said he hoped the meeting would inspire even further efforts.

“Stock exchanges and other financial bodies and institutions have a key role to play,” he said, and highlighted the “unprecedented” partnerships forged between the UN and the business and financial communities in recent years. Among them is the UN Global Compact, the world’s largest corporate sustainability and responsibility initiative, which currently involves over 5,000 companies across 130 countries.

Giffords said, “The global financial crisis convinced many investors and policymakers of the urgent need to promote better risk management, good governance and enhanced transparency to protect long-term returns.”

Paul Abberley, chief executive of Aviva Investors, said: “We are extremely pleased with our collaboration with the UN and have high hopes that today’s conference will play a catalytic role in promoting more sustainable business behavior. Our main focus is on promoting a global listing environment that requires companies to consider how responsible and sustainable their business model is.”

“We are delighted to cohost this unique platform to explore how these market players can enhance corporate transparency, and ultimately performance, on ESG issues, and so encourage responsible, long-term approaches to investment. This is the right discussion at the right time, and I hope a forward-looking agenda on corporate sustainability reporting that matches investor demand will emerge as an output of this event,” said Georg Kell, executive director of the UN Global Compact.

A report released in July by the UN Environment Program (Unep) and a powerful group of asset managers controlling some $2 trillion in assets argued that if investment consultants and others do not incorporate ESG considerations into their services, they face “a very real risk that they will be sued for negligence.”

It also stressed the central role the world’s largest institutional investors—including pension funds, insurance companies, sovereign wealth funds and mutual funds—have in easing the transition to a low-carbon and resource-efficient green economy.

Investors and governments across the world must promote green investments in the midst of a combined attack on the global economic crisis and global warming, said Unep executive director Achim Steiner. “ESG issues are not peripheral but should be part of mainstream investment decisions-making processes across the industry.”

Further, Steiner noted that creative market mechanisms and other incentives can help to ensure that as investors return to markets after the current financial turmoil ends, they will put their funds into a greener economy and not the “brown economy of yesterday.”

“Delivering a transition to a low-carbon, resource-efficient Green Economy cannot occur without the creativity, vision, actions, and support of a broad cross-section of society,” he added.