London, 6 April 2017 – The World Federation of Exchanges ("WFE"), which represents more than 200 market infrastructure providers including exchanges and CCPs, today released its annual global Environment, Social and Governance ("ESG") survey.
Now in its third year, the survey aims to capture the nature and extent of WFE engagement with ESG issues, and how this evolves over time. Overall, WFE member exchanges continue to expand their involvement in ESG, through initiatives such as promoting ESG disclosure by listed companies; offering ESG products (sustainability indices and green bonds, for example); and acting as advocates for sustainability more broadly.
Key highlights of the survey include:
- Around 90% of respondents have sustainability programmes in place, with 67% citing ESG disclosure from listed companies as the most popular initiative. This represents a big shift from last year's results, when issuer/investor education ranked first (sixth this year), and shows the effectiveness of campaigns such as SSE's Close the ESG Guidance Gap and the WFE's own ESG Metrics & Guidance document.
- In line with previous surveys, sustainability indices remain the most common ESG product offered by exchanges (42%), but there has been marked growth in the number of exchanges listing green bonds (17%).
- Whilst 75% of exchanges believe it will be possible to develop globally consistent ESG disclosure standards, there was some caution around the applicability of globally consistent metrics, with some respondents commenting that regional variances would remain.
- When asked about the reasons for their involvement with ESG, 81% cited sustainability concerns (overtaking reputation/PR from last year), demonstrating the increasing understanding from exchanges of the role they play in promoting greater sustainability in their markets.
Another key finding from the survey identified a potential disconnect between exchanges' sustainability efforts and investor demand, particularly around ESG disclosure. It appears that, at least in some markets, there is not genuine investor interest in ESG information. The emphasis, therefore, on ESG disclosure in the absence of investor pressure, may lead to companies taking a compliance approach, rather than having a genuine commitment to change.
Nandini Sukumar, Chief Executive Officer, WFE said: "The WFE is encouraged by the growing and ongoing commitment to ESG within its membership base. These survey results not only show the practical ways in which the majority of global exchanges are tackling the long-term health and sustainability of their markets, but also demonstrate the continuing mainstreaming of the ESG agenda in the financial sector."
Siobhan Cleary, Head of Research & Public Policy, WFE added: "While we fully support the focus on ESG disclosure, we believe moving towards better, decision-useful ESG metrics will in the future enable a more meaningful assessment of corporate management of ESG-related risks and opportunities."
The survey was conducted by the WFE in Q1 2017, and the results were compiled from questionnaire responses supplied by exchanges and their clearinghouses.
- Ends -
About the World Federation of Exchanges (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, 41% are in Asia-Pacific, 40% in EMEA and 19% in the Americas. WFE exchanges are home to nearly 45,000 listed companies, and the market capitalisation of these entities is over $67.9 trillion; furthermore, around $84.18 trillion (EOB) in trading annually passes through the infrastructures WFE members safeguard (at end 2016).
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 Sustainability Working Group (SWG):
The WFE SWG was established in May 2014, primarily to act as a research and consultation body for the member exchanges of the WFE on the topic of ESG. At the publication of this report, the SWG had 27 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.