The WFE publishes five Sustainability Principles for member exchanges

By: The WFE Research Team Oct 2018

The WFE has published a set of five WFE Sustainability Principles ("the Principles") that constitute a formal declaration by the WFE and its membership to take on a leadership role in promoting the sustainable finance agenda.

The Principles clearly demonstrate that WFE members - while recognising they are at different stages of market development, with different opportunities and constraints - will seek to promote the Principles progressively in accordance with their circumstances and priorities.

The five WFE Sustainability Principles are:

  1. Exchanges will work to educate participants in the exchange ecosystem about the importance of sustainability issues: This education (capacity building) is designed to build an understanding and appreciation of the impact of ESG issues on the long-term health and performance of financial markets, and the important role that markets can play in enabling a transition to a more just and sustainable world. Capacity building may be done independently or in collaboration with third parties, and may take the form of seminars, courses, case-studies, information sharing among market participants, and the publication of research.
  2. Exchanges will promote the enhanced availability of investor relevant, decision-useful ESG information: This could include issuing disclosure guidance to assist issuers, and organising information-sharing/training sessions for issuers around ESG reporting. Exchanges may implement disclosure requirements in phases, beginning with voluntary disclosure, and moving to mandatory/comply or explain disclosure.
  3. To ensure the quality of the disclosure, exchanges should encourage disclosure in accordance with widely accepted international standards and against science-based indicators.
  4. Exchanges will actively engage with stakeholders to advance the sustainable finance agenda: This could range from engagement with regulators and policymakers to promote the creation of the necessary enabling environment, to contributing to the development of consensus around a sustainability taxonomy, and collaborating with other market participants to develop products that advance the sustainable finance agenda.
  5. Exchanges will provide markets and products that support the scaling-up of sustainable finance and reorientation of financial flowsExchanges can contribute to the mobilisation and reorientation of sustainable finance by, for example, creating frameworks for the listing of green, social and sustainability bonds; developing sustainability indices; and working with third parties to develop sustainability ratings.
  6. Exchanges will establish effective internal governance and operational processes and policies to support their sustainability efforts: Exchanges commit to taking steps to better embed sustainability into their governance, strategy and organisational structures, to support the shift into a more sustainable financial system. This could include: incorporating ESG disclosure into the exchanges' own sustainability reporting; educating staff about sustainability risks and opportunities; and establishing board and senior management oversight of the exchange's own management of ESG risks and opportunities.

You can read the WFE Sustainability Principles here.