The World Federation of Exchanges (WFE) Green Equity Principles (the Principles) set out a global framework that individual exchanges can use to establish a ‘green’ offering for listed equities, thus improving the flow of funding towards the financing of more sustainable economies. The Guidance published today supplements these with further operational standards on how they should be applied. The WFE is launching a public consultation today until 15 January 2024 on both documents (please see the next page for details).

The voluntary Principles define ‘green’ criteria for equities (including initial public offerings [IPOs]) which, if met, will allow the listed equities to obtain the ‘WFE Green Equity Classification.’ The Guidance sets out practical considerations for exchanges who wish to establish offerings that align to the WFE Green Equity Classification and covers the principles themselves, as well as operational matters such as:

  • Designation of responsibility within the exchange for overseeing the classification
  • Establishing relevant processes including criteria for revoking classification
  • Development of the classification mark and provision of public information
  • Criteria for assessing the appropriateness of reviewers.

Individual exchanges can choose to apply and manage the Principles and Guidelines in their own jurisdictions assuming that doing so, would not contravene existing jurisdictional legislation.

The Principles and Guidelines have been developed in response to WFE members around the world seeking to tailor offerings to clients who wish to obtain greater visibility of green activities. Exchanges are striving to bring clarity, consistency and rigor to the concept of green and to counter greenwashing. By establishing the Principles, the WFE aims to contribute to international recognition amongst various offerings, thereby supporting cross-border investment activities.

The goal behind these Principles and Guidelines is to promote all regulated equity markets in supporting progress towards a sustainable economy – similarly to other offerings, such as green bonds, social bonds , sustainability bonds and sustainability-linked bonds. As evidenced by the WFE’s own Annual Sustainability Survey – in 2021, green bonds were the most popular sustainable green securities offering globally.

As gatekeepers and guardians of the regulated equity markets, exchanges play a key role in creating access to capital markets by enabling deep and liquid pools of capital, by enabling price discovery, and by supporting wealth creation. The role they play in sustainable finance will be even greater in fostering inclusive, sustainable global growth and encouraging long-term horizons for financial decision-making. Green Equities can play an important role in helping to create a more sustainable world.

Exchanges were invited to explore how these Principles and subsequently the Guidelines might be applied within their own jurisdictions, while taking existing legislative and regulatory requirements into account. Whilst these Principles and Guidelines are not mandatory nor do they place any new formal additional listing standards, the minimum criteria outlined in these Principles and Guidelines must be met in order for an exchange to use the WFE Green Equity classification as part of its offerings.

This publication today of the new Guidelines which supplement the Principles is now open for public consultation. This paper therefore sets out a series of questions for all stakeholders in equity markets to participate in the WFE’s work in this area. The WFE welcomes comments on both the Principles and Guidelines by 15 January 2024.

Please submit feedback to [email protected].

Please note that we will publish all responses on our website unless explicitly requested not to.