A new exchange and the rise of ESG: ICE Chairman and CEO Jeff Sprecher looks ahead to 2022

What’s the biggest change this year has brought? What have been the biggest challenges and opportunities?

We accomplished a lot this year at ICE. When you look back, it’s extraordinary to think it all happened in the space of 12 months.

Even amid a global pandemic, we launched a new exchange - our first in the Middle East - after we were chosen by the Abu Dhabi National Oil Company (ADNOC) to create the world’s first-ever futures contract based on Murban, the UAE’s signature crude. On March 29, supported by ADNOC and nine of the world’s largest energy trading firms, ICE Futures Abu Dhabi (IFAD) and Murban crude futures went live. It has been a big success, with over a million contacts traded in just eight months, equivalent to one billion barrels.

In May, we launched the UK’s first-ever standalone carbon market on behalf of the UK Government. And in June, we transitioned trading in our benchmark European carbon allowance contract to Amsterdam from London, reflecting how EUAs have become the EU’s primary policy tool to tackle the energy transition.

One of the most impactful evolutions in finance happened just a few weeks ago. Over a single weekend in December, we completed the transition of our benchmark Sterling and Euroswiss LIBOR contracts to their risk free rate equivalents. This culminated an effort spanning many years of intense work across the entire company to help our customer base move off LIBOR and adopt risk free rates.

All of these notable events happened as we witnessed some of the biggest impacts of the energy transition in action, with gas and carbon hitting new record highs and societies seeing that impact in their monthly energy bills. One of the enduring themes to emerge through all of this has been the importance of hedging against future price risk. That, in a nutshell, is why our markets exist.

ICE has been a key player in environmental markets since its early days, at a time when carbon was a very niche market. Now many years later, there is incredible momentum behind environmental markets, with governments using carbon cap and trade programs as one of their primary policy tools to tackle emissions. We are strong supporters of market-driven mechanisms like cap and trade programs, and 2021 has been a record year as more and more companies need to price and manage climate risk.

How easy or difficult has it been to do business both globally and domestically?

The entire focus of our mission at ICE is to connect people with opportunities. This happens every day around the world. We operate in more than 25 countries, have 13 exchanges and six clearing houses, and today ICE has almost 10,000 employees spanning that geographic footprint.

From our origins as a handful of entrepreneurs in Atlanta, Georgia, working to bring life to a simple idea of increasing transparency and efficiency in the energy markets, we have become a truly global company. Given the pace at which we now operate, in terms of launching new products and meeting our customers’ needs, we’ve been laser-focused on innovating against the backdrop of the policies and actions of governments in the regions in which we operate.

The same has been true as we have worked to adapt to the realities of continuing to grow amid a global pandemic. Our Covid response team has worked nonstop to react to the different and changing circumstances across the world regarding workplace safety and working from home, implementing a wide range of approaches to preserve our unique culture, while at the same time allowing our people to protect themselves and their families.

What’s your vision of the future of work?

The pandemic has accelerated -- even faster than we could have foreseen -- the shift from analogue to digital in operating many aspects of our life and work. From ordering meals and food for home delivery, to helping our children adapt to online education, we anticipate even more changes in the years ahead. Two years ago, we could never have imagined that children -- from London to Amsterdam to New York to San Francisco to Singapore -- could be taught successfully from their homes via a tablet and headphones.

The evolution is imperfect, and often frustrating, but the shift from in-person to remote working in all of our locations has become something that we’ve learned to deal with, and will be with us for some time in one form or another. Throughout the current pandemic and beyond, technology will remain as the linchpin, connecting us faster anytime, anywhere, in our work, home and family life.

What are the three most important themes you see in 2022?

ICE’s environmental markets are the largest and most liquid in the world. Energy consumption is expected to double over the next 30 years, but government policies that are being codified across the globe are expected to reduce carbon emissions by half.

The resulting changes in supply and demand will introduce additional complexity and volatility in the years ahead, which will bring with it even more demand for hedging, possibly from companies that have never needed to hedge before. The reduction in carbon usage is unlikely to be linear, so none of us should be surprised if 2022 brings with it similar bumpy markets to what we have lived through this past year.

We often hear from our customers that they need granular and actionable ESG data. Over the past year, we’ve expanded and introduced tools that allow users to look at ESG factors within companies, individual securities and specific regions. ICE’s ESG Reference Data offering provides users with primary ESG data points, including GHG emissions reported, board diversity metrics, and nearly 500 other key ESG-related metrics. We also recently acquired risQ and Level 11 Analytics, which deploy sophisticated, data-driven technologies for managing climate change risk and these acquisitions expand our capabilities in U.S. fixed income markets. We believe that investors will continue to look for ways to make sure that they’re incorporating ESG in their decision-making and portfolios.

In the U.S. capital markets, the New York Stock Exchange experienced its second-straight year of record new listings and many of the companies making their public debuts in 2021 had a strong focus on ESG. This is a theme we’ve seen emerging for some time, as investors actively look for companies that have made a commitment to their ESG journeys. This will certainly continue into 2022 and beyond. I imagine we also will continue to see innovative new products emerge to help issuers and investors across asset classes navigate this landscape. A perfect example is ICE Climate Risk, which helps identify and quantify the risk associated with adverse climate events.

What was your most memorable moment this year as a leader?

For all of the critical work our company does, ICE doesn’t usually see its name in lights. That’s why the day that ICE Futures Abu Dhabi launched, it was so astonishing to watch Abu Dhabi lit up in celebration. To commemorate the moment, the Sheikh Khalifa bridge and nine iconic buildings across Abu Dhabi were bathed in our distinctive ICE blue, with our ICE logo projected on buildings and landmarks across the city. That was a truly magical moment and something I’ll never forget. It was a moment to reflect on the extraordinary journey our company has been on for more than two decades. But just as quickly, we realised that this was only another milestone, with more innovation on the horizon in the years ahead.