London, Thursday 17 May 2018 - The World Federation of Exchanges ("The WFE"), the global industry group for exchanges and CCPs, today published its fourth annual Environmental, Social and Governance (ESG) survey of members, which shows nearly 90% of member exchanges are embracing sustainability initiatives.
The WFE survey captured the nature and engagement with ESG issues by member exchanges in both developed and emerging markets.
Overall, member exchanges continue to leverage their position to adopt more sustainability initiatives in their respective markets. Exchanges are prioritising the long-term sustainability of the financial system to educate more market participants, proactively drive ESG disclosures, and increase the number of sustainability products offered in their markets. Some exchanges said a lack of resources has hindered the adoption of ESG initiatives, as has insufficient demand, and there are reservations about the potential impact of these initiatives.
The survey also highlights the continued divergence of investor demand between emerging and developed markets in adopting and supporting sustainability initiatives. Despite lower investor appetite for ESG-related initiatives, many exchanges across emerging markets are gearing-up their efforts to incorporate sustainability-related financial products.
Perceived investor demand for ESG disclosure increased from last year, while the demand for sustainability products has remained broadly the same as 2016.
Please click here to download the full survey. Key highlights include:
- Overall, 88% of member exchanges now embrace some form of ESG initiative, and 43% of exchanges have increased the number of initiatives (that took part in last year's survey).
- 73% of ESG disclosures for listed companies were driven by the exchange, rather than the market regulator, in each market.
- Seven exchanges have adopted the Task Force on Climate-Related Financial Disclosures (TCFD) Recommendations, while a further 11 are planning to incorporate these recommendations soon.
- Exchanges are leading by example with 57% incorporating ESG factors into their own reporting, up from 48% in 2016.
- Investor demand for ESG disclosure has increased to 70% in 2017 from 64% last year, and 54% of exchanges believe there is demand for sustainability-related products.
- 70% of exchanges that reported no investor demand are either from emerging or smaller exchanges within the EMEA region. And;
- The number of exchanges offering green or climate bonds has increased to 15 from eight exchanges last year, while sustainability indices remain the most commonly offered product.
Nandini Sukumar, CEO, WFE said: "Exchanges are using their position within the financial system to transition the global economy towards more sustainable development.
"This survey reveals an increasing maturity through proactive engagement with market participants, more transparency for listed-companies, and a reorientation of investment towards a more sustainable financial system."
Siobhan Cleary, Head of Research & Public Policy, WFE, added: "More exchanges offering more ESG products, for example sustainable indices and green bonds, and encouraging more ESG disclosure of listed-companies, is creating a favourable market for sustainability."
The survey was conducted in 2018 by the WFE and covers the 2017 period, focusing on three key themes: exchanges and their sustainability initiatives, transparency and reporting, and sustainability products and Investor demand. The results were compiled from questionnaire responses supplied by exchanges and their clearinghouses.
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About the World Federation of Exchanges (The WFE):
Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 200 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 36.8% are in Asia-Pacific, 42.6% in EMEA and 20.6% in the Americas. WFE exchanges are home to nearly 45,000 listed companies, and the market capitalisation of these entities is over $82.5 trillion; around $81.8 trillion (EOB) in trading annually passes through the infrastructures WFE members safeguard (at end 2017.The WFE is the definitive source for exchange-traded statistics, and publishes over 350 market data indicators. Its statistics database stretches back more than 40 years, and provides information and insight into developments on global exchanges.
The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities' goals of ensuring the safety and soundness of the global financial system, which is critical to enhancing investor and consumer confidence, and promoting economic growth.
About the WFE's Sustainability Working Group (SWG):
The SWG was established in May 2014 and is a member-led forum for exchanges to decide industry best practice on the topic of ESG, this includes the development and formation of policies, policy positions and consultation responses.
At the publication of this report, the SWG had 29 members, and together, the group clarifies and shapes the industry's view on ESG issues as well as providing a platform for learning, the development of standards and advocacy. Since its formation, the SWG has produced an ESG Recommendations and Guidance document, which included setting out 33 key ESG performance indicators for exchanges to consider in relation to sustainability disclosure in their own markets.
For more information, please contact:
Steven John Harry
Communications Associate, The World Federation of Exchanges
Phone: +44 7456 070389
LinkedIn: The World Federation of Exchanges