(9 November 2022) At the 27th UN’s Climate Change Conference (COP27) the UN Sustainable Stock Exchanges (SSE) initiative, in partnership with UNFCCC’s Global Innovation Hub, convened industry experts to discuss how exchanges can play a key role in creating a climate-positive market environment. A group of experts representing exchanges, investors, and regulatory and standard-setting bodies shared with participants of COP27 the shifts they are seeing in markets and the important role that exchanges are playing in facilitating innovative solutions to tackle climate change and enhance the resilience of financial markets.
In the past years, exchanges have demonstrated the immense movement-creating power they can exercise in order to create market-wide change and sustainable development. To this end, climate action has been the key focus point for many market infrastructures.
Moderated by SSE Academy Head Tiffany Grabski, a panel of ten sustainability professionals highlighted the central role of exchanges in supporting and leading a net zero transition and facilitating or promoting innovative financing mechanisms such as Voluntary Carbon Markets (VCMs). Participants in the panel represented seven stock exchanges (CME Group, Deutsche Börse, the Egyptian Exchange, ICE, Johannesburg Stock Exchange, London Stock Exchange Group and the Singapore Exchange) as well a regulatory authority (the UK’s Financial Conduct Authority), one standard-setting body (the IFRS’ international sustainability standards board) and one investor (Aviva).
“The London Stock Exchange became the first exchange to issue dedicated climate reporting guidance based on TCFD in 2021. This marked an important output of our partnership to achieve global consistency on climate reporting with UN SSE and we’ve seen material improvements in the quantity and quality of disclosure since then.” - Claire Dorrian, Head of Sustainable Finance, Capital Markets, London Stock Exchange Group
"The present challenges and opportunities associated with a low carbon transition provide a compelling case for market leadership and innovation for stock exchanges as part of a broader market ecosystem." - Shameela Soobramoney, Chief Sustainability Office JSE
“CME Group operates voluntary carbon futures markets that enable risk management for project developers and for offset buyers, helping to grow the global VCM markets” - Owain Johnson, Managing Director, Global Head of Research and Product Development, CME
"We are looking forward to working with the exchange community to ensure that VCMs can deliver on what they promise.“ - Mark Manning, Technical Specialist, Sustainable Finance and Stewardship, FCA
Digging into the technical details, panellists highlighted the significance of consolidated disclosure standards for the availability of high-level climate data and the important effects of market education programmes to assist markets to become climate-resilient.
Mark Manning, Technical Specialist, FCA (left) with Jingdon Hua, Vice Chair, ISSB (middle) and Tiffany Grabski, Head of Academy, SSE (right) at COP27
"Capital markets will play a pivotal role in the climate transition by aligning investment to sustainability goals." - Elizabeth King, President, Sustainable Finance, ICE
“We have to create the structures that investors can make informed and individual to support net zero.” - Christina Sell, Chief Sustainability Officer Trading & Clearing Deutsche Börse
“A true global standard is not true if it is only adopted in the global north – we need the global south on board.” - Jingdong Hua, Board member, ISSB, IFRS
The UN SSE, in collaboration with the IFC and CDP, has assisted exchanges and their markets in the implementation of climate disclosure by conducting TCFD training in 38 markets around the world over the past 12 months. Julie Becker, CEO of the Luxembourg Stock Exchange said:
“Through these free courses, exchanges contribute to highlighting the importance of climate-related disclosures and help market participants understand what the TCFD recommendations mean and imply for them. We consider it as our duty to help strengthen sustainable finance knowledge across the financial sector and beyond, and these online courses clearly contribute to this objective. By joining forces, the UN SSE, IFC and CDSB have built a relevant and insightful training programme which we would recommend other exchanges to capitalize on in their respective markets. ”
You can find out more about the SSE Academy’s training programs by following the SSE’s newsletter here.
