In recent years, capital market investors around the world have given increasing attention to socially responsible investments and are increasingly placing emphasis on environmental, social, and governance (ESG) considerations. Several major investment entities, mainly institutional investors and leading financial institutions, have begun incorporating in their portfolios investments with ESG effects; alongside these are various corporations that are increasingly devoting resources to taking such considerations into account in their operations.
The Israel Securities Authority (ISA) examined the need to adopt regulation for disclosures by the reporting corporations whose securities are traded on the Tel Aviv Stock Exchange ("the Stock Exchange" or "TASE"). Accordingly, in July 2020 the ISA published a public consultation document containing various questions related to such disclosures ("the Call"). The response to the Call was unprecedented: Dozens of entities and individuals submitted their responses to the questions posed in the Call. Following analysis of the public input, ISA Staff conducted two round-table discussions in December 2020. The first was a local Israeli discussion attended by representatives of relevant domestic entities including public companies and institutional investors, the Association of Public Companies, the Stock Exchange, financial regulators, academic scholars, and law and accounting firms. The second was an international discussion attended by representatives of global investment entities and credit rating agencies, among others. In the past year, ISA Staff also conducted a series of discussions with representatives of the Prime Minister's Office, the Ministry of the Environment, and the Ministry of the State Controller on this issue.
Based on these actions, ISA Staff developed the following recommendations regarding the desired outline:
The ISA invites all reporting corporations whose securities are traded on TASE to publish an annual CSR report to public investors and other stakeholders. Response to this call is entirely voluntary.
A corporation may publish annual CSR reports on its website or, if it so elects, may send a copy of its published CSR report to the ISA, for publication on a dedicated area on the ISA website. Such publication, if any, will not be subject to the Securities Law 5728-1968 ("the Securities Law") or the regulations enacted under it. However, reporting entities that publish a CSR report through the MAGNA system should take into account that the publication of the report is subject to effect of the securities laws.
The ISA invites all reporting corporations that elect to publish an annual CSR report to draft the report on the basis of generally accepted international standards such as GRI or SASB. Nonetheless, reporting corporations that elect to publish an annual CSR report may draft the report on the basis of other acceptable standards.
The ISA calls all reporting corporations that elect to publish an annual CSR report, and that intend to transit to English-language reporting pursuant to the Securities Regulations (Reporting in English) 5781-2020, to publish said report in English. Publishing directly in English will serve the interests of those reporting corporations that would like to create exposure for their CSR report to international investors both private and institutional, as well as credit rating agencies that develop rating reports on the basis of ESG figures.
The ISA calls all reporting corporations that elect to publish an annual CSR report to publish said report in proximity to the publication of their Periodic Report for the relevant reporting period.
The ISA intends to provide support to reporting corporations that elect to publish a CSR report by conducting professional training sessions and workshops for representatives of the reporting corporations.
Contacts: Eli Daniel, Adv.;Galia Levy, Adv.;Reut Kessler, CPA.
The Complete outline (Hebrew) ; Short version (English)