A decade of progress: The World Federation of Exchanges publishes its 10th annual Sustainability Survey

 

PRESS RELEASE

A decade of progress: The World Federation of Exchanges publishes its 10th annual Sustainability Survey

London, 28 May 2024 – The World Federation of Exchanges (WFE), the global industry group for exchanges and CCPs, has today published its 10th annual Sustainability Survey revealing a decade of progress within the exchange industry, and capturing the dramatic change in the wider attitude of market participants towards sustainability, since our first survey. 

A reduction in concerns amongst exchanges about a lack of resources, as well as business and economic concerns for developing sustainability capabilities, demonstrates the attention and investment the industry has been channelling into this area. This investment mirrors the significant rise in demand for ESG products from investors, showing that over the past decade exchanges have been investing to meet a need. 

Encouragingly, the milestone achieved last year was met again, with every exchange that responded continuing their participation in at least one WFE Sustainability Principle and ESG initiatives, showing that this is sustained progress. More exchanges are implementing more initiatives, indicating a deepening engagement with ESG transparency.

10 Year Key Highlights	2023	2014
Respondents that offer ESG-related products	41	16
Respondents reporting investor demand for ESG products	98%	64%
Number of exchanges offering green bonds	34	8*
Number of exchanges encouraging/mandating ESG disclosures from issuers	98%	38%
Respondents that implement sustainability initiatives linked to the UN SDGs	81%	36%
Respondents that publish their own sustainability report (including sustainability information in annual report)	86%	30%

*8 exchanges were recorded as offering green bonds in 2016 – this data was not collected prior to 2016.

2023 Key Highlights	2023	2022
Respondents that participate in at least one WFE Sustainability initiative	100%	100%
Respondents included as a constituent of one or more indexes tracking the firms' sustainability or ESG performance	33%	26%
Respondents that implement initiatives that correspond to all five of the WFE’s Sustainability Principles	70%	70%
Respondents that implement sustainability initiatives linked to the UN SDGs	78%	76%
Respondents that have targets in place to increase female representation	46%	30%

Investor interest in ESG

The survey showed that investor interest in ESG products is increasing, prompting exchanges to facilitate the listing, trading, and oversight of these offerings. Most exchanges (96%) acknowledged investor demand for ESG disclosure, with 45% observing a strong demand. 98% of exchanges reported investor interest in ESG products, and 82% of exchanges offered ESG-related products in 2023, with green bonds/sukuks remaining the most popular ESG product. 

Exchanges remain the primary promoters of ESG disclosure ensuring the quality of data needed by investors continues to improve and issuers are well placed to respond to international demand. The survey found that 53% of exchanges included the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in the reporting guidance or reporting requirements for listed companies and 33% are planning to do so.

Carbon Markets

Ten of the respondents confirmed the existence of carbon markets within their jurisdiction. Among them, four exchanges highlighted the presence of both voluntary and compliance and carbon markets in their respective regions. Regarding the most traded environmental products, seven out of those ten respondents indicated that their platforms facilitated trading carbon offsets through spot markets, followed by platforms for trading carbon allowances and the auction of carbon offsets, both present in four jurisdictions.

Looking ahead

In keeping with last year’s survey results, the key challenges for exchanges remain primarily the lack of reliable ESG data and insufficient resources for implementing initiatives. Additionally, regulatory initiatives to combat greenwashing and promote integrity in voluntary carbon markets highlight the need for continued vigilance and collaboration across the industry, so we can expect continued focus on these issues in the near term. 

Nandini Sukumar, CEO of the WFE commented, “With ten years of ESG survey data behind us, it is clear that exchanges are leading the finance industry in its effort to achieve sustainability. The 2023 data shows further progress as exchanges continue to foster transparency, promote responsible investment practices, and provide increasingly innovative ESG-related products. As an industry, we are playing a pivotal role in advancing the global transition by closing the climate funding gap required to achieve a more sustainable future.”

The full report can be read here.

For more information, please contact:

Edelman Smithfield             

+44 7813 407 665
[email protected]

Cally Billimore                

Communications Manager       

+44 7391 204 007

[email protected]            

About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents the providers of over 250 pieces of market infrastructure, including standalone CCPs that are not part of exchange groups. Of our members, 36% are in Asia Pacific, 43% in EMEA and 21% in the Americas. The WFE’s 87 member CCPs and clearing services collectively ensure that risk takers post some $1.3 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. The exchanges covered by WFE data are home to over 55,000 listed companies, and the market capitalization of these entities is over $111tr; around $124tr in trading annually passes through WFE members (at end-2023).

The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.

Website: www.world-exchanges.org

Twitter: @TheWFE

---