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The official Financial Regulation Journal of SAIFM

Exchanges Globally Agree Framework for Green Equities

The World Federation of Exchanges Publishes Green Equity Principles as Industry Seeks to Counter Greenwashing and Aid Capital Flows
 


London, 23 March 2023 – The World Federation of Exchanges (WFE), the global body for exchanges and CCPs, today announced its industry-wide WFE Green Equity Principles, the first global framework for designating stocks and shares as green, thereby countering greenwashing and supporting the enhanced flow of funding towards more sustainable economies.

The Principles, agreed upon globally by members, bring the industry together with a harmonised definition. They are designed to be a framework, consisting of ‘’WFE Green Criteria for Equities’’ and the ‘’WFE Green Equity Classification.’’ The framework is based on the following five overarching pillars:

  • Revenues/investments
  • Use of a taxonomy
  • Governance
  • Assessment
  • Disclosure


The purpose of the WFE Green Equity Principles is to enable:

Exchanges to:

  • promote improved access to capital by issuers whose activities are primarily green; and
  • provide investors with additional information on green activities to aid their capital allocation decisions.

Issuers to:

  • raise their profiles among investors that are actively looking to deploy capital to companies committed to sustainability;
  • use the classification as a marketing and communications tool; and
  • increase visibility of their green credentials and commitment to the green economy which can help to mitigate against greenwashing.

Investors to:

  • have information that will assist them with their investment decision-making.


Nandini Sukumar, CEO of the WFE,  said: “This is a milestone in sustainable finance. The exchange industry has worked together over the last year to agree on the Principles which are a structured framework. The WFE Green Equity Principles provide a carefully evaluated structure within which exchanges set criteria for issuers and investors to demonstrate their green credentials. Investors should be able to have greater visibility of issuers who have green activities in a way that is rigorous and that counters greenwashing. Exchanges strive to bring clarity, consistency and rigour to the concept of green and to counter greenwashing.”

The WFE Green Equity Principles are the first step within a longer-term roadmap on which the industry has agreed. In subsequent phases, the WFE will publish an accompanying guidance note to the Green Equity Principles. The WFE will then open both to public consultation, seeking wider stakeholder feedback.

The work is taking place within the WFE’s Sustainability Working Group (SWG), the industry forum for all sustainability professionals in market infrastructure, and the group formally mandated to work on all public policy, industry-led standards and guidance on ESG globally for exchanges and CCPs.

You can read the WFE Green Equity Principles in full here.

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