Athens, 4 October 2018 - The World Federation of Exchanges ("WFE"), the global industry group for exchanges and CCPs, has today 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.
Today's 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.
The report also includes a summary of global sustainable finance initiatives.
Nandini Sukumar, CEO, WFE said: "The WFE and its members acknowledge our role in fostering and promoting the development of a sustainable financial system, making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development, and promoting the transition towards an inclusive, and sustainable economy. The launch today of the five WFE Sustainability Principles marks an even clearer commitment by the WFE membership to role-model and promote actions that work towards a more sustainable financial future. We are proud of the action they have already taken to further the sustainability agenda, but feel even more encouraged by their adoption of these Principles, and look forward to seeing even greater progress in this important area."
Siobhan Cleary, Head of Research & Public Policy, WFE said: "There is no alternative to taking a sustainable approach to the financial system. We recognise that not all market participants will be able to address all five WFE Sustainability Principles. We believe, however, that we have identified areas where exchanges can have real impact in advancing the sustainable finance agenda, and we would encourage all exchanges to use these Principles as the baseline for the development of their market-specific initiatives."
Wu Qing, Vice Mayor of Shanghai and Non-Executive Chairman of Shanghai Stock Exchange (SSE) commented: "As the global industry association for exchanges and CCPs, the WFE's release of the five WFE Sustainability Principles represents a solid step in the industry's advocacy for sustainable financial development. Thanks to the joint efforts of WFE members, we are delighted to declare that we will take a leading role in the sustainable agenda for exchanges. I am happy to see the fruition of the Principles that I initiated and encouraged during my mandate as WFE Chairman.
"In addition to the traditional role in supporting the development of the real economy, exchanges have become increasingly influential in 'greening' the global economy. Supporting and taking the Principles as a guidance for our future development is in line with the long-term interests of exchanges. We hope that regulators, exchanges and their stakeholders will use the WFE platform to continue the dialogue on sustainable development and address our common sustainability challenges."
The WFE Sustainability Principles were launched at the 58th WFE Annual Meeting in Athens, which is taking place this week. More than 300 delegates have gathered for a programme of 13 speeches and panel sessions on the key topics and issues impacting the market infrastructure industry. Find out more about the conference here.
You can read the WFE Sustainability Principles here.