Stock exchanges all over the world are trying to advance ESG investing by gradually incorporating ESG considerations into listing rules, indexes and regulatory frameworks.
The European Union has been working on building a framework for a sustainable financial system for years. This is called the Sustainable Finance Action Plan (SFAP). The pace of the regulatory reform in the US is expected to accelerate under the new administration.
How can you benefit from this? Most major bourses offer access to ESG products and marketplaces across the different asset classes. Besides rating agencies, index providers and other ESG tools, big stock exchanges, like the Nasdaq for example, offer ESG services to both listed companies and investors. The Nasdaq ESG Data Portal provides a central database, compilation and repository for companies and investors to access ESG and performance metrics.
Investors are able to integrate the data into their portfolio and quantitative analysis, equity research and screening processes. The risk assessment of an individual company can be created and compared with peer firms in the same sector and market size category. Screening of potential investments considers operational efficiency, risk oversight and transparency.Nasdaq
The NYSE provides resources and platforms for dialogue between issuers and investors to help create more sustainable companies that deliver long-term benefits for all stakeholders. Check out their ESG Case Studies section, where you can learn how other NYSE-listed companies manage ESG issues via real-world examples.
International initiatives to boost ESG investing
The Sustainable Stock Exchanges (SSE) initiative, a United Nations project, was launched in 2009 in New York. It is a partnership of exchanges to encourage sustainable, responsible investment, integrate ESG values into financial products and promote corporate sustainability reporting. By now, the SSE has 103 partner exchanges and 55 bourses around the world are providing guidance on reporting ESG issues for their markets.
There is a similar initiative in Europe. The members of the Federation of European Securities Exchanges (FESE), which represent 36 bourses from 30 European countries, run markets dedicated to sustainable finance, offer products that advance sustainable development and help track the performance of sustainable companies.
