The world must get to a state of net zero emissions as soon as possible (and by 2050 at the absolute latest) in order to limit the worst effects of climate change.
The Goal
Stock exchanges are making 'net zero commitments' to help their markets transition to net zero greenhouse gas emissions. Through their functions as educators, product innovators and information gateways for the market, exchanges have an important role to play in the global transition to net zero emissions. UN SSE provides guidance, capacity building and technical assistance to support exchanges in their efforts to meet their net zero commitments.
Net Zero Exchange Group
Net zero is defined by the IPCC, the United Nations body for assessing the science related to climate change, as: “When anthropogenic CO2 emissions are balanced globally by anthropogenic CO2 removals over a specified period.” Simply put, at a global level the world needs to balance the amount of emissions put into the atmosphere with the amount taken out.
Since COP26 in 2021, there have been many ‘net zero commitments’ made across the financial industry, including by stock exchanges. The UN SSE is the secretariat for the Net Zero Exchange Group whose members are exchanges that have made a net zero commitment. The group is part of the broader Net Zero Financial Service Providers Alliance and sits under the overall umbrella of the Glasgow Financial Alliance for Net Zero. This webpage tracks the work of the Net Zero Exchange Group, its members and their progress on their net zero journeys.
Current members are:
- Amman Stock Exchange (ASE),
- Bahrain Bourse (BHB),
- Bolsa Mexicana Grupo BMV,
- Cboe,
- Deutsche Börse,
- Hong Kong Exchanges and Clearing (HKEX),
- Japan Exchange Group,
- Johannesburg Stock Exchange (JSE),
- Latinex,
- London Stock Exchange Group (LSEG),
- Luxembourg Stock Exchange,
- Muscat Stock Exchange (MSX),
- Palestine Stock Exchange (PEX),
- Philippine Stock Exchange,
- Singapore Exchange (SGX).
How to Join
The NZFSPA Exchange Group is committed to leading the charge in the financial sector’s transition to net zero. By fostering a collaborative environment, providing transparent progress tracking, and aligning with global sustainability goals, we aim to create a powerful force for positive change. If your exchange would like to join us as we pave the way to a sustainable future, ensuring a thriving planet for generations to come, please take a look at the NZFSPA Commitment form
Contact the secretariat for the NZFSPA Exchange Group here.
Setting net zero targets
"We urgently need every business, investor, city, state and region to walk the talk on their net zero promises." - Antonio Guterres, UN Secretary-General
The members of the NZFSPA Exchange have agreed upcon a Target Setting Framework, which serves as a common base for exchanges to set their own individual targets, tailored to their specific market circumstances.
The Framework provides a comprehensive roadmap for capital market infrastructure operators to align their own operations with the goals of the Paris Agreement, and assist their markets to address the climate crisis. Developed in collaboration with over 56 industry experts from 28 different organisations, the Framework guides exchanges to set ambitious and credible net zero targets, enabling them to contribute meaningfully to a sustainable future. The approved framework can be found here.
The Framework emphasises the important role exchanges can play in leading by example, providing climate-related market education and promoting a just transition. It also captures the need for continuous reporting on progress.
With the approval of the framework, the Exchange Group become partner of the Race to Zero. Find out more about the relationship here.
“We warmly welcome the Net Zero Financial Service Providers Exchange Group as an official partner of the Race to Zero, highlighting the pivotal role of stock exchanges in catalysing the transition to a sustainable future. This partnership harnesses the collective power of financial service providers committed to achieving net zero emissions, exemplifying the collaborative spirit essential to tackling the climate crisis and inspiring others to join the global movement towards a just transition to a net-zero resilient world." - Dr Mahmoud Mohieldin and Her Excellency Ms Razan Al Mubarak, UN Climate Change High-Level Champions
About the NZFSPA
Jointly organised by
The Net Zero Financial Service Provider Alliance (NZFSPA) is a group of companies committed to playing a critical part in the global effort to move towards net zero. Service providers are an essential part of finance sector action on climate change.
NZFSPA was established at the New York Climate Week in 2020 and has published its own 8-point net zero commitment, that all members need to sign:
Download the full form here.
NZFSPA is made up of four groups with a vital and connected role to play.
Auditors build trust and confidence in information through the assurance services they provide on company-prepared financial information.
Exchanges run and maintain critical infrastructures and networks connecting investors, issuers and regulators. They act as influencers, educators and information gateways.
Index providers give real-time information about market performance. This is a key input for passive investment products and active investment fund strategies.
Research and data providers develop the research and data needed by all links in the investment chain. They also engage with and educate their clients, corporate issuers, and others.
You can find a full list of members here
The wider Net Zero Universe
The NZFSPA is a pivotal component of the global net-zero movement.
As financial institutions play a critical role in financing the transition to a low-carbon economy, organisations within the NZFSPA are organising their efforts with the Glasgow Financial Alliance on Net Zero (GFANZ). By leveraging their collective expertise, they aim to lead by example, set benchmarks for sustainable finance and encourage other exchanges to follow suit. GFANZ members are also working closely with the UN-backed Race to Zero initiative.
About Net Zero
Put in simple terms, net zero means that the balance between the amount of greenhouse gases (GHGs) produced and removed from the atmosphere is zero; it looks at emissions overall. That means that while an absolute reduction in emissions is critical, the net zero concept allows for removing any unavoidable emissions. Removing GHGs could be via nature (e.g. trees take carbon dioxide from the atmosphere) or through new technology or changing industrial processes.
GHGs are a key driver of global warming and ensuring that the world reaches net zero GHG emissions is essential for tackling climate change. Over the past decade, global emissions have risen steadily. To have any hope of keeping the long term global temperature rise to 1.5°C we need to have halved emissions by 2030 and reached net zero by 2050. Doing this requires us to reduce emissions by about 7% per year. Business as usual is not an option.
The next decade is critical, which is why every country, sector and industry must work together to find ways to cut GHG emissions.
Resources
Policy Brief: The Net Zero Movement
2021
Get started with an overview of the net zero movement and learn about what net zero means. The Policy Brief: The Net Zero Movement can be found here.
Net Zero Target Setting Guidance for Exchanges
2023
Find out how exchanges best contribute to the net zero movement and how they set their net zero targets. The Net Zero Target Setting Guidance for Exchanges 2023 can be found here.
SSE Model Guidance on Climate Disclosure
The SSE published a tool for exchanges titled “Model Guidance on Climate Disclosure: A template for stock exchanges to guide issuers on TCFD implementation” to assist exchanges in guiding their market on how to disclose climate-related financial information. The template is oriented around the Financial Stability Board’s (FSB) Task Force for Climate-Related Disclosures (TCFD) recommendations, the current best practice for climate-related disclosure. Within this guidance the template is written in the voice of an exchange, providing text they may use when they guide their issuers, as well as ideas for strengthening their guidance by adapting it to their market’s circumstances.
For an editable version of the SSE Model Guidance on Climate Disclosure please contact the SSE team at [email protected].
NZFSPA 8-point Commitment Form
2021
Access the NZFSPA Commitment Form to become a member. Note that this needs to be signed by your organisation’s CEO and shared with the relevant secretariat. The Commitment Form can be found here.
Additional Materials offered by the UN SSE on how to get your market climate ready can be found here