Exchanges agree on global framework for designating stocks and shares as green
“Investors should be able to have greater visibility of issuers who have green activities in a way that is rigorous and that counters greenwashing. Exchanges strive to bring clarity, consistency, and rigor to the concept of green and to counter greenwashing.”
The World Federation of Exchanges has announced the WFE Green Equity Principles, the first global framework for designating stocks and shares as green.
The move by the global body for exchanges and CCPs intends to counter greenwashing and support the enhanced flow of funding toward more sustainable economies.
Improving access to capital by issuers whose activities are primarily green
The WFE Green Equity Principles are designed to be a framework, consisting of the ‘’WFE Green Criteria for Equities’’ and the ‘’WFE Green Equity Classification”, based on five overarching pillars:
- Revenues/investments
- Use of a taxonomy
- Governance
- Assessment
- Disclosure
With the establishment of the WFE Green Equity Principles, exchanges will be able to promote improved access to capital by issuers whose activities are primarily green, as well as provide investors with additional information on green activities to aid their capital allocation decisions.
Issuers will raise their profiles among investors that are actively looking to deploy capital to companies committed to sustainability;
use the classification as a marketing and communications tool, and increase the visibility of their green credentials and commitment to the green economy which can help to mitigate against greenwashing.
Investors will have information that will assist them with their investment decision-making.
“Greater visibility of issuers who have green activities”
Nandini Sukumar, Chief Executive Officer of the WFE, said: “This is a milestone in sustainable finance. The exchange industry has worked together over the last year to agree on the Principles which are a structured framework. The WFE Green Equity Principles provide a carefully evaluated structure within which exchanges set criteria for issuers and investors to demonstrate their green credentials. Investors should be able to have greater visibility of issuers who have green activities in a way that is rigorous and that counters greenwashing. Exchanges strive to bring clarity, consistency, and rigor to the concept of green and to counter greenwashing.”
The WFE will also publish an accompanying guidance note to the Green Equity Principles and open both to public consultation, seeking wider stakeholder feedback.
The work is taking place within the WFE’s Sustainability Working Group (SWG), the industry forum for all sustainability professionals in market infrastructure, and the group formally mandated to work on all public policy, industry-led standards, and guidance on ESG globally for exchanges and CCPs.
