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Net Zero Alliance for Exchanges: Launch of New Service Providers Alliance

Today marks the launch of the new Net Zero Financial Service Providers Alliance (NZFSPA), part of the broader Glasgow Financial Alliance for Net Zero (GFANZ) that has been led by the UN Special Envoy on Climate Action and Finance, Mark Carney. 

This new alliance is open to exchanges and other financial organizations who have committed to aligning their relevant services and products to achieving a net zero economy by 2050, at the latest. Alliance members will set Science Based Targets for their own emissions and have committed to report on their progress, including publishing disclosures aligned with the recommendations of the Taskforce on Climate-Related Financial Disclosures. 

The SSE is proud to announce that two of its members, the London Stock Exchange Group and the Singapore Exchange, will be founding members of this new alliance. 

David Schwimmer, CEO of London Stock Exchange Group (LSEG), said: “Financial markets are central to the world achieving net zero emissions. A new financial service provider’s alliance recognises the pivotal role market infrastructure providers such as LSEG have in mobilising the trillions needed to transition to a net zero world and support the growth of new green industries.”

Loh Boon Chye, CEO of Singapore Exchange (SGX), said: “Sustainability in Asia is steadily gaining momentum. As the world’s engine of growth, how the Asia region takes on climate action collectively could make or break success. Through GFANZ, Singapore Exchange looks forward to providing leadership and voice for Asia’s climate transition needs whilst putting into context the region’s other specific environmental and social objectives.”

LSEG and SGX are joined by the world’s two largest credit rating agencies, six major audit networks and three leading index providers, among eighteen leading organisations today launching the Net Zero Financial Service Providers Alliance, uniting investment advisors, credit rating agencies, auditors, exchanges, index providers, ESG research and data providers, and proxy research providers.  

The newly launched alliance further strengthens GFANZ, part of the UN Race to Zero campaign. GFANZ now includes well over 250 financial firms responsible for assets in excess of $88 trillion committed to align capital with net zero.

Mark Carney, the UN Special Envoy on Climate Action and Finance and the UK Prime Minister’s Finance Adviser for COP26 said: “The new Net Zero Financial Service Providers Alliance will be critical to helping the financial sector achieve net zero. By joining the alliance and GFANZ, these firms are committing to ensuring their products and services support a high ambition, credible net zero transition that we need to achieve our 1.5 degree goal.”

Fiona Reynolds, CEO at the Principles for Responsible Investment and member of the SSE Governing Board, said: “We welcome today’s announcement on the formation of the new Net Zero Service Providers initiative. It has never been more vital for net zero considerations to be built in at every stage of the investment process. The resources made available by signatories to the initiative will enable strong implementation, helping investors move from commitment to action on net zero by setting clear and practical targets to enact meaningful change.”

The role of stock exchanges 

Stock exchanges have an important opportunity to prepare their markets for the growing demand for climate-related information in a systematic and globally consistent manner as is being demanded increasingly by investors and the finance sector. In all markets, stock exchanges find particular value in helping their issuers’ attract capital from international and domestic investors by promoting and enhancing climate-related disclosures. As investors and providers of finance increase integration and consideration of climate risks, and many commit to align their portfolios with net-zero emissions, it’s essential that companies seeking their capital through markets can provide the climate-related information needed. Stock exchanges can help issuers meet investor demands by promoting consistent and comparable reporting practices. In this manner exchanges also help ensure the climate resiliency of their market as well as the long term stability, transparency and growth. 

UN SSE actively supports exchanges 

To assist stock exchanges to support all capital market participants through these new advancements and to ensure concurrency both within their market and globally, the SSE has convened a Climate Advisory Group and together developed  the SSE’s Model Guidance on Climate Disclosure and the Action Plan to Make Markets Climate Resilient: How stock exchanges can integrate the TCFD recommendations.  

Regardless of their unique market circumstances domestically, all stock exchanges are encouraged to act now to prepare for changing trends in investment strategies, policy and regulation and legal and reputational risks. The key trends shaping this work are discussed in greater detail in the SSE’s Model Guidance on Climate Disclosure.

SSE also works with derivative exchanges and published recently How Derivatives Exchanges can Promote Sustainable Development – An Action Menu. This report provides an overview of the role of derivatives markets generally, presents some of the things derivatives exchanges are already doing in relation to sustainability, and highlights ways in which these exchanges can support the transition to more sustainable development pathways.

For further information on what net zero commitments mean for exchanges, download the new SSE Policy Brief on the Net Zero Movement. If your exchange would like to join this new net zero alliance, please contact the SSE secretariat ([email protected]) and we’ll guide you through the process. The full text for the Commitment to the Net Zero Financial Services Providers Alliance can be found here, including the supplemental text that provides interpretative guidance.