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LSE cuts its losses with transfer of data exchange

January 2007

The Corporate Responsibility Exchange (CRE), the ailing London Stock Exchange project that has been addressing ‘questionnaire fatigue’, has been transferred to a new owner.

The project has been handed to ICSA Software, a division of the Institute of Chartered Secretaries and Administrators, the global professional body that represents 40,000 company secretaries and senior administrators. ICSA Software already runs similar information-sharing databases on corporate governance and says the venture is a ‘natural fit’ with its existing activities.

No price was given for the transaction, which the ICSA said was a ‘transfer’.

The LSE established the CRE in 2004 as a central repository of information on companies’ ethical performance. It was heralded then as a solution to the questionnaire fatigue caused by demands for non-financial company data made by analysts, investors, researchers, index compilers and rating agencies.

The intention was to enable businesses to submit information only once and to distribute the data to investors for an annual fee. However, unexpectedly faint interest, coupled with staff cutbacks and the distraction of takeover bids for the LSE, undermined the project (EP8, issue 3, p1).

Under the transfer, which took place shortly before Christmas, all existing agreements between CRE and its clients were terminated, although ICSA Software has immediately invited them to rejoin on similar terms. However, this time institutional investors, which were expected to pay an annual fee of about £20,000 ($39,000) under the old regime, will now receive free access ‘to encourage companies to publish their data’. This suggests the new model aims to make its money from charging companies to file data.

ICSA Software is confident of attracting more participants by improving the technology infrastructure so that users can upload and access data faster and more reliably, and by promoting the project more effectively. It claims that CRE had 170 clients in seven countries, including 42 of the FTSE 100. Ethical Investment Research Services and Business in the Community have been the main users of the information, with few investors having shown interest under LSE ownership.

Craig Mackenzie, head of business ethics at Glasgow Caledonian University and a member of the LSE working party that developed the CRE, said the new owners had taken on a challenge.

‘One of the main things the CRE had going for it was the support of the LSE, which has huge status for companies and investors in the UK and so makes a very attractive focus for collective effort,’ he said. ‘Without this, it just becomes one more service provider. ICSA has some limited status in this field, but nothing like the heft of the LSE.

‘While the CRE may survive as a service for companies, I can’t see it achieving the initial ambition of becoming a central clearing house for CSR data.’



Further Information
http://www.icsasoftware.com/cre
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