Kristina Jeromin tells us about the recent launch of a Sustainable Finance Initiative.
Financial markets are increasingly focused on sustainability issues. How important is the disclosure of ESG (Environmental, Social and Governance) information for the financial community?
Since the outbreak of the financial crisis, the market has become more and more insistent that companies publish not only traditional financial indicators but that they also disclose relevant ESG-related risks and opportunities to their core business. The disclosure of these data and awareness of these topics will become crucial for companies, as they will be relevant to their business performance in the medium to long term.
We can already see a correlation between companies’ financial performance and how well they manage their ESG agenda. ESG issues should be considered more as drivers of innovation and new business – as well as a way of identifying hidden risks, which could also be important to safeguarding systemic stability. Furthermore, investors are increasingly focusing on sustainable investment strategies. Sustainability already exerts enormous influence on the way the financial community behaves and will also transform the way the real economy works.
Under the name 'Accelerating Sustainable Finance Initiative' Deutsche Börse is launching an initiative to bring together the Frankfurt Financial Community. Tell us more about the reasons for this project.
As an international infrastructure provider, we are well aware of our responsibility for the future development of capital markets. We see it as our role to establish an open dialogue about this vast and imminent transformation of global finance structures which sustainability will bring about.
The fundamental question for all participants is whether our financial system is future-proof? Do our capital markets, and the dynamics that rule them, encourage new and innovative investment strategies – with an impact beyond the paradigm of short-term profit maximisation?
We are convinced that solutions can only be found by engaging with all relevant parties. That is why we invited a broad range of participants from banks, financial institutions, rating and ranking agencies, investors, insurance companies, data providers and representatives from the public, academic, NGO and church sectors. This exchange is key to further defining the playing field, in which we can be active. This engagement also includes a dialogue with other international Stock Exchange Organisations, e.g. our membership of the Sustainability Working Group of WFE or the Social Stock Exchange Initiative (SSE).
How has the financial community so far responded to your initiative?
We think there is a good momentum behind the programme. The further development of sustainable financial markets will continue to be driven forward by Sustainability efforts at the global level. To name a few - the Sustainable Development Goals proposed by the United Nations, the Green Finance focus of the G20, which the German G20 presidency has taken up, following the Chinese leadership of the organisation last year or legal requirements on listed companies to disclose material information on sustainability issues. Many large financial centres are already well positioned, and there are further promising projects on the horizon. The Frankfurt initiative has been very well received. All panels will be staffed by top-level representatives - an essential signal of the importance and ambition of the campaign. It is not enough to discuss these topics on one afternoon. This can only be a success story if we have a long-term commitment.
What key topics are you targeting with the Sustainable Finance Initiative? And what are your expectations for it?
The aim is to establish new interdisciplinary structures for sustainable entrepreneurship. The Sustainable Finance Initiative will serve as a platform for dialogue on all issues concerning the financial system's future viability and to launch further specific initiatives and projects involving all stakeholders.
The kick-off conference took place on 23 May in Frankfurt and from there on, participants will work further on specific topics in individual task forces. The main subject for that initial conference was the status quo of Sustainable Investing - products and services, impact investing and financial inclusion, but also the future of ESG.
We are expecting all participants to take an active role in shaping and filling in the details of a sustainability agenda. After all, we can draw on the combined expertise of the entire market. We are convinced that this approach is more efficient and that the involvement of so many is essential. There is still a lot of work to be done, but this initiative is an excellent starting point.