The WFE responds to IOSCO's Sustainable Finance Network

By: The WFE Focus Team Jun 2019

The WFE responded to the International Organization of Securities Commissions’ (IOSCO) Sustainable Finance Network (SFN) survey, which aims to inform the SFN of sustainable finance-related initiatives taken or planned by securities regulators and market participants, and initiatives taken by international bodies, industry lead groups and standard-setters regarding sustainable finance and how these relate to the role of securities regulators.

The WFE’s response summarised the work the association has done on environmental, social and governance (ESG) issues since the inception of its Sustainability Working Group in 2014. This work ranges from the annual Sustainability Survey (2016; 2017; and 2018), to its ESG Guidance & Metrics (in 2015 and 2018), and last year’s Sustainability Principles. The WFE also recently responded to IOSCO’s Growth and Emerging Market Committee (GEMC) consultation on ‘Sustainable Finance in Emerging Markets and the Role of Securities Regulators’.

The survey's response also outlined the range of sustainability initiatives that WFE member exchanges are engaged in, ranging from running ESG capacity building events for issuers and/or investors, engaging stakeholders to advance the sustainable finance agenda, publishing the exchange's own sustainability report, offering sustainability-related products, right through to issuing formal ESG reporting guidance for issuers, collaborating with external organisations (e.g. Global Reporting Initiative, Sustainability Accounting Standards Board, United Nations) and producing corporate governance ratings.

The response reiterated the WFE’s stated position on whether more regulation is needed on ESG-related issues, noting that, while regulation can be effective in ensuring consistent and effective implementation, this should only be considered when there is sufficient market understanding of the relevant issues to avoid a tick-box approach to compliance. In earlier stages of market development, guidance and education may be more effective.