Exchange in Focus: LSEG joins United Nations Climate Change ‘Race to Zero’
25 February 2021
LSEG (London Stock Exchange Group plc) announces that it has become the first global exchange group to commit to net zero through the Business Ambition for 1.5° and thus becomes a member of the United Nations Climate Change ‘Race to Zero’.
LSEG says it is committed to reducing its emissions by almost 50% by 2030 and will engage all key suppliers, to set science based Scope 3 emissions targets by 2025. LSEG has also been a supporter of the Task Force for Climate-related Financial Disclosures (TCFD) since its launch in 2017. LSEG not only encourages issuers to report against TCFD through the exchange’s reporting guidance but aims to go further each year in embedding these standards into LSEG’s own financial reporting. LSEG is chairing the SSE Climate Disclosure Advisory Group that is developing Model Climate Reporting Guidance to be launched later in 2021. The model guidance will assist stock exchanges in developing best practice reporting guidance for issuers to ensure globally consistent disclosures incorporating the recommendations from the TCFD. Here you find more information on the work of the SSE Climate Disclosure Advisory Group.
Climate risks pose threats to ecosystems, societies, markets and to companies and a globally coordinated response is needed to mitigate and manage those risks. LSEG has signaled that it is committed to taking action, supporting the growing drive to a net-zero carbon economy. LSEG is in an important position within global financial markets to act as a facilitator, bringing together investors and issuers in three critical areas:
- Data and disclosure - catalysing consistent, comparable and reliable global climate data
- Growth of the green economy - enabling the growth and development of green industries
- Climate transition across all sectors - supporting investment and capital flows to achieve climate transition and resilience
New Transition Bond Segment
As part of LSEG efforts to drive action on climate change, London Stock Exchange announced it will become the first exchange to launch a dedicated Transition Bond Segment. The segment will display debt instruments from issuers who have a corporate strategy or transition framework that is aligned to the Paris Agreement, including approved targets to achieve net zero, and discloses, manages and addresses climate-related risks in line with global standards such as the Climate Transition Finance Handbook, the CBI Transition Certification Framework and the Transition Pathway Initiative. The new segment joins Green, Social, Sustainability, Sustainability-Linked and Green revenues bond segments to form London Stock Exchange’s Sustainable Bond Market (SBM). Currently 34 stock exchanges worldwide have sustainability bond listing segments, according to the SSE Stock Exchange Database. To Grow the Green Economy, London Stock Exchange’s Green Economy Mark recognises listed companies with 50% or more of their revenues derived from products and services that contribute to the global green economy, as defined by FTSE Russell’s Green Revenues 2.0 Data Model. London Stock Exchange’s Sustainable Bond Market allows for Green Economy issuers with over 90% of green revenues to display their bonds on a dedicated green revenues segment. In Data & Analytics, FTSE Russell is helping investors calibrate indices to their requirements to achieve climate and other environmental, social and governance goals. To support Climate Transition, the FTSE TPI Climate Transition Index, which was launched in early 2020, was the first global index to enable investors to align a broad equity portfolio with climate transition and the goals of the Paris Agreement.About the SSE
The SSE initiative is a UN Partnership Programme organised by UNCTAD, the UN Global Compact, UNEP FI and the PRI. The SSE’s mission is to provide a global platform for exploring how exchanges, in collaboration with investors, companies (issuers), regulators, policymakers and relevant international organizations, can enhance performance on ESG (environmental, social and corporate governance) issues and encourage sustainable investment, including the financing of the UN Sustainable Development Goals. The SSE seeks to achieve this mission through an integrated programme of conducting evidence-based policy analysis, facilitating a network and forum for multi-stakeholder consensus-building, and providing technical assistance and advisory services.
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