Green Finance experts roll out new plan

18 November 2017

The United Nations Sustainable Stock Exchanges Initiative, convened by UNCTAD and its partners, has unveiled a new plan to help bourses grow green finance and thereby contribute to global efforts to reduce carbon emissions.

On the sidelines of the COP23 climate summit in Bonn, Germany, capital market leaders from around the world gathered to share ideas for promoting green finance in alignment with the Paris Agreement on climate change and the Sustainable Development Goals. Convened by the Sustainable Stock Exchanges (SSE) initiative and hosted by the Luxembourg Green Exchange, the event featured the release of a new SSE action plan on how stock exchanges can grow green finance.

“This new Green Action Plan will guide the efforts of Stock Exchanges all over the world to go green. The fact that Luxembourg’s Stock Exchange has taken the lead in this initiative shows once again that Luxembourg’s financial center is at the forefront of sustainable finance,” said Pierre Gramegna, Minister of Finance of Luxembourg.

The new SSE plan was built with the inputs of over 70 experts from around the world and includes practical examples from more than a dozen stock exchanges including Brazil’s B3 exchange, Deutsche Boerse, Intercontinental Exchange (parent to New York Stock Exchange), Johannesburg Stock Exchange, Luxembourg Stock Exchange, London Stock Exchange, Nasdaq and Shanghai Stock Exchange, among others. A checklist of 12 action points within four action areas forms the heart of the new guidance, which can be used as a self-assessment or benchmarking tool to identify areas where stock exchanges can initiate or expand their activities on green finance.

“This SSE guidance offers action points and guidance for stock exchanges and constitutes a roadmap towards our ambitious goal of simultaneously stimulating demand and supply for green investing,” said Robert Scharfe, CEO of the Luxembourg Stock Exchange.

“This guidance document provides stock exchanges in any market with a solid platform to ensure the development of green finance initiatives in their market and to support their Nation’s achievement of their Paris Agreement commitments,” said Patricia Espinosa, Executive Secretary of the UN Framework Convention on Climate Change. “We applaud the SSE and its Advisory Group on Green Finance for this exceptional work in ensuring all stock exchanges have the tools to succeed in transitioning to green markets.”

The SSE is a peer-to-peer learning platform for exploring how exchanges—in collaboration with investors, regulators, and companies—can encourage sustainable investment and enhance corporate transparency, and ultimately performance, on environmental, social and corporate governance issues.

It is convened by UNCTAD, the UN Global Compact, the UN Environment Finance Initiative (UNEP FI), and the Principles for Responsible Investment (PRI).

“Transitioning our economies to a sustainable footing will require innovative forms of finance and investment, which is why we need more collaboration between policy makers and capital markets to help us deliver on our global climate commitments,” said Isabelle Durant, Deputy Secretary-General of UNCTAD. “We are engaging with stock exchanges and capital market leaders to encourage them to demonstrate leadership, seize the opportunities that green finance offers, and help us transition to the sustainable economies of the future.”

“We welcome the leadership taken by some pioneering stock exchanges on green finance,” said Fiona Reynolds, Managing Director of the PRI. “We call on all stock exchanges to work with investors, issuers and regulators to take steps to support the transition to a low carbon economy.”

Werner Hoyer, President of the European Investment Bank, said​, “Stock exchanges can play a decisive role in triggering the trillions needed to ward off a global tragedy. Therefore, I very much welcome today’s release of this important publication by the UN Sustainable Stock Exchange. I hope that actions will soon follow words and that this plan, which highlights two crucial aspects: promoting green products, and greening financial markets, will stimulate supply and the demand for green finance.”

He added, “It is estimated that 90 trillion dollars of sustainable investment is needed by 2030. The path to a 2-degree world may look long and steep for climate activists. But I firmly believe that green bonds – pioneered by the European Investment Bank 10 years ago – alongside other green financial instruments, can help us reach this target.”

SSE has a global reach, and its members include the Egyptian Exchange, or EGX.

“Fully aware of the growing importance of stock exchanges’ role and contribution to the global climate related challenges, EGX remains committed to raise the awareness on the importance of green finance in securing a better tomorrow for future generations.  We commend the SSE initiative as a learning platform that helps exchanges supporting the transition of green finance and taking a leading role in creating more sustainable and inclusive economies,” said EGX Chairman Mohamed Farid Saleh.

His words were echoed by Jean-Luc Gravel, Executive Vice-President, Equity Markets of Caisse de dépôt et placement du Québec.

“Seeing climate change at the top of stock exchanges’ agendas is yet another sign that things are moving forward rapidly in addressing this global challenge. The development of green finance makes new options more accessible to a larger array of investors and contributes to accelerating the transition to a low-carbon economy and building more sustainable markets for future decades,” Mr Gravel said.

“In the wake of the Paris Agreement and evolving consumer choices and technology, markets are already changing rapidly. This will create new attractive investment opportunities for our clients. Over the next three years, we will increase our investments in low carbon assets by over 8 billion dollars. We have also committed to reducing our carbon footprint by 25% per dollar invested by 2025. These objectives are ambitious, achievable and will be subject to reporting.”