World Federation of Exchanges’ Eighth Annual Sustainability Survey Reveals Focus On Carbon Neutrality Transition
New WFE Data Highlights “Significant Advance” In Depth And Scope of ESG
London, 12 September 2022 – The eighth Annual Sustainability Survey published by the World Federation of Exchanges (WFE), the global industry group for exchanges and central clearing counterparties, has revealed a significant advance in the depth and scope of environmental, social and corporate governance (ESG) – with an increased focus on the transition to carbon neutrality.
This year’s report confirms the strength of what has consistently been a positive trend in the response of exchanges to ESG issues.
The WFE Sustainability Survey is the only report that provides a picture of Environmental, Social and Governance (ESG) activity at market infrastructures across the world. It captures both the nature and extent of member engagement with ESG issues in both developed and emerging markets. Since its launch in 2014, the Sustainability Survey has consistently captured the growing engagement with ESG matters among the WFE membership.
Nandini Sukumar, Chief Executive Officer of the WFE, said: “Our new survey results highlight the vital role that the exchange industry plays in the shift towards a sustainable and inclusive global economy. It is encouraging for us, as an industry that has championed ESG in financial markets for more than a decade, to see a positive trend towards carbon neutrality accompanied by genuine interest and engagement in these issues from stakeholders.”
Notable highlights from the survey include:
- Exchanges increased their efforts by reducing their own carbon footprint, promoting the transition of their listed companies to a climate-neutral or carbon-neutral economy, and committing to Net-Zero pledges.
- Eight respondents (out of 54) reported participating in 12 ESG initiatives in 2021, compared to five respondents in 2020.
- Initiatives offering ESG education have rapidly gained relevance over the years. They ranked eighth in 2019 In terms of the number of exchanges pursuing them, third in 2020, and second in this survey.
- Not only has the number of exchanges participating in sustainability initiatives increased but also more initiatives were implemented per exchange. The average number of initiatives per exchange increased from 7.7 to 8.4.
- The number of exchanges implementing initiatives that meet all five of the WFE Sustainability Principles increased by 17% to 69%.
- Sustainability concerns and the opportunities for business expansion were again the most frequently reported motivations for ESG engagement. On the other hand, business and economic concerns remain the main concerns around sustainability efforts, while the lack of resources was seen as the second major concern.
- Efforts on ESG were more evenly distributed across Environmental (31.2%), Social (30.6%) and Governance (38.6%) components, compared to 25.8%, 31.3% and 42.9% respectively a year earlier.
- While green bonds continue to be the most offered ESG product, offerings across all sustainability product categories have increased.
- Eight respondents reported engaging in initiatives to prevent human rights abuses in the supply chains, and three respondents reported participating in all of the 13 listed ESG initiatives.
- There was limited progress regarding gender equality, with only small increases in the average percentage of female representation at Board and Senior Management positions.
The Sustainability Survey maps exchanges’ activities against the WFE’s Sustainability Principles, which all exchanges, both WFE members and others, continue to demonstrate sustained engagement with. Published in October 2018, these Principles state that exchanges will educate participants about sustainability issues; promote the enhanced availability of ESG information; engage stakeholders to advance the sustainable finance agenda; provide markets and products that support the development of sustainable finance; and embed sustainability into the exchange’s governance, strategy, and organisational structures.
A total of 54 exchanges participated in this year’s survey. As in previous years, the survey questionnaire was revised to capture the latest exchange-related sustainability developments.
You can download a copy of the report here.
About the World Federation of Exchanges (WFE)
Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia-Pacific, 43% in EMEA and 20% in the Americas. WFE’s 57 member CCPs collectively ensure that risk takers post some $1 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. WFE exchanges are home to 59,400 listed companies, and the market capitalization of these entities is over $122.94 trillion; around $162.04 trillion (EOB) in trading annually passes through WFE members (at end 2021).
The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.
With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.