The WFE has published a set of five WFE Sustainability Principles ("the Principles") that constitute a formal declaration by the WFE and its membership to take on a leadership role in promoting the sustainable finance agenda.
The Principles clearly demonstrate that WFE members - while recognising they are at different stages of market development, with different opportunities and constraints - will seek to promote the Principles progressively in accordance with their circumstances and priorities.
The five WFE Sustainability Principles are:
- Exchanges will work to educate participants in the exchange ecosystem about the importance of sustainability issues:This education (capacity building) is designed to build an understanding and appreciation of the impact of ESG issues on the long-term health and performance of financial markets, and the important role that markets can play in enabling a transition to a more just and sustainable world. Capacity building may be done independently or in collaboration with third parties, and may take the form of seminars, courses, case-studies, information sharing among market participants, and the publication of research.
- Exchanges will promote the enhanced availability of investor relevant, decision-useful ESG information: This could include issuing disclosure guidance to assist issuers, and organising information-sharing/training sessions for issuers around ESG reporting. Exchanges may implement disclosure requirements in phases, beginning with voluntary disclosure, and moving to mandatory/comply or explain disclosure.
- To ensure the quality of the disclosure, exchanges should encourage disclosure in accordance with widely accepted international standards and against science-based indicators.
- Exchanges will actively engage with stakeholders to advance the sustainable finance agenda: This could range from engagement with regulators and policymakers to promote the creation of the necessary enabling environment, to contributing to the development of consensus around a sustainability taxonomy, and collaborating with other market participants to develop products that advance the sustainable finance agenda.
- Exchanges will provide markets and products that support the scaling-up of sustainable finance and reorientation of financial flows: Exchanges can contribute to the mobilisation and reorientation of sustainable finance by, for example, creating frameworks for the listing of green, social and sustainability bonds; developing sustainability indices; and working with third parties to develop sustainability ratings.
- Exchanges will establish effective internal governance and operational processes and policies to support their sustainability efforts: Exchanges commit to taking steps to better embed sustainability into their governance, strategy and organisational structures, to support the shift into a more sustainable financial system. This could include: incorporating ESG disclosure into the exchanges' own sustainability reporting; educating staff about sustainability risks and opportunities; and establishing board and senior management oversight of the exchange's own management of ESG risks and opportunities.
You can read the WFE Sustainability Principles here.