The World Federation of Exchanges (WFE), the global industry group for exchanges and CCPs, today published the results of its seventh annual Sustainability Survey.
The WFE Sustainability Survey is the only report that provides a picture of Environmental, Social and Governance (ESG) activity at market infrastructures across the world. It captures both the nature and extent of member engagement with ESG issues in both developed and emerging markets. Since its launch in 2014, the Sustainability Survey has consistently captured the growing engagement with ESG matters among the WFE membership.
The Sustainability Survey maps exchanges’ activities against the WFE’s Sustainability Principles, which all exchanges, both WFE members and others, continue to demonstrate sustained engagement with. Published in October 2018, these Principles state that: exchanges will educate participants about sustainability issues; promote the enhanced availability of ESG information; engage stakeholders to advance the sustainable finance agenda; provide markets and products that support the development of sustainable finance; and embed sustainability into the exchange’s governance, strategy, and organisational structures.
A total of 62 exchanges participated in this year’s survey, of which 8 were WFE affiliates. As in previous years, the survey questionnaire was revised to capture the latest exchange-related sustainability developments. This year, questions were added to gauge the adoption of different standards used to define sustainability, to understand the balance between ESG efforts and to highlight gender balance at the board level.
Notable highlights from this year’s WFE survey include:
- 50.8% of exchanges had initiatives in place that correspond to all five Sustainability Principles – a 10 percentage point increase from last year.
- ESG is an integral part of exchanges’ strategies and ethos, as the average number of initiatives implemented per exchange increased from 6.7 to 7.7.
- Whilst Governance was an area where exchanges placed most of their sustainability efforts in 2020, there was an increased focus on social factors for example, facilitating the issuance of bonds aimed to support sectors affected by the pandemic.
- Business and economic concerns are cited as the main barriers to implementing ESG initiatives, a reflection of the uncertainty caused by the pandemic.
- Investor demand for ESG products continues to drive innovation. While green bonds are the most offered ESG products, offerings across all sustainability product categories have now increased, including Sustainability Linked Bonds (SLBs), which nine exchanges have reported offering.
- For the second year in a row, a lack of convergence in ESG standards and disclosure formats continues to concern our members.
Nandini Sukumar, Chief Executive Officer, the WFE said: “Our survey results highlight the exchange industry’s continued leadership in sustainability matters. As we continue to emerge and learn lessons from the pandemic, exchanges will play a vital role in the shift towards an inclusive and sustainable global economy. As an industry that has championed ESG in financial markets for over a decade, we are pleased to see engagement and interest in these issues from a wider group of stakeholders.”