London, Monday 10 June 2019 – The World Federation of Exchanges ("WFE"), the global industry group for exchanges and CCPs, has today responded to the International Organization of Securities Commissions’ (IOSCO) Sustainable Finance Network (SFN) survey, which aims to inform the SFN of sustainable finance-related initiatives taken or planned by securities regulators and market participants, and initiatives taken by international bodies, industry lead groups and standard-setters regarding sustainable finance and how these relate to the role of securities regulators.
The WFE’s response summarised the work the association has done on environmental, social and governance (ESG) issues since the inception of its Sustainability Working Group in 2014. This work ranges from the annual Sustainability Survey (2016; 2017; and 2018), to its ESG Guidance & Metrics (in 2015 and 2018), and last year’s Sustainability Principles. The WFE also recently responded to IOSCO’s Growth and Emerging Market Committee (GEMC) consultation on ‘Sustainable Finance in Emerging Markets and the Role of Securities Regulators’.
Today’s survey response also outlined the range of sustainability initiatives that WFE member exchanges are engaged in, ranging from running ESG capacity building events for issuers and/or investors, engaging stakeholders to advance the sustainable finance agenda, publishing the exchange's own sustainability report, offering sustainability-related products, right through to issuing formal ESG reporting guidance for issuers, collaborating with external organisations (e.g. Global Reporting Initiative, Sustainability Accounting Standards Board, United Nations) and producing corporate governance ratings.
The response reiterated the WFE’s stated position on whether more regulation is needed on ESG-related issues, noting that, while regulation can be effective in ensuring consistent and effective implementation, this should only be considered when there is sufficient market understanding of the relevant issues to avoid a tick-box approach to compliance. In earlier stages of market development, guidance and education may be more effective.
Nandini Sukumar, Chief Executive Officer, WFE said: "ESG sits at the heart of the exchange mandate as part of our role as guardians of public markets and champions of transparency and good corporate governance. Our industry is a leader in this area and is committed to remaining so.
“ESG is one of the WFE’s strategic priorities for 2019, and we have been proactively tackling the topic since 2014. We are pleased to see the importance placed on sustainability by IOSCO in recent months. We believe that securities regulators, in line with their mandate of investor protection, can assist in moving towards the adoption of globally applicable, consistent standards, which are necessary to ensure effective, comparable disclosure and ESG labelling.”