Exchange of the year: London Stock Exchange
The London Stock Exchange beat off stiff competition to claim best exchange of 2021.
107 bonds worth over £52 billion ($68 billion) were listed in 2021 on the exchange’s Sustainable Bond Market, including £31 billion from sovereign bonds – six-fold greater than in 2020 – bringing the total value of active bonds to $142 billion.
The exchange launched several initiatives this year as part of its mission to support investors on sustainability issues.
At the COP26 climate conference in Glasgow, the exchange announced plans to develop an initiative to accelerate the availability of financing for voluntary carbon markets. The tool would tackle the challenges of accessing capital at scale and accessing a long-term supply of high-quality carbon credits.
The green, social, sustainability and sustainability-linked bonds market is “fast-growing”, having expanded by 68% annually since 2015, says the exchange’s Elena Chimonides, senior product development manager, and Shrey Kohli, head of debt, in a joint comment.
The success of the exchange came as it encouraged issuers and stakeholders to embed analysis and disclosure of the just transition to net-zero into “every asset class and investment decision”, the executives say.
Also at COP26, the exchange became a founding member of a high-level working group on green sukuk, alongside members including the UK government and the Islamic Development Bank, aiming to develop the market. The exchange listed the first sustainable sukuk from the Kingdom of Saudi Arabia in January this year.
This year the exchange became the first to issue climate reporting guidance based on the UN guidance for sustainable stock exchanges – which is aligned with the Taskforce for Climate-related Financial Disclosures (TCFD) recommendations.
In addition, the exchange has also launched a ‘transition segment’ within its sustainable bond market – joining green, social, sustainability and sustainability-linked components of its Sustainable Bond Market.
Despite numerous innovations, the greatest challenges remain ensuring robust standards within a rapidly moving market, Chimonides and Kohli say.
“While global taxonomies for sustainable finance continue to evolve, as the London Stock Exchange we need to ensure we incorporate market feedback and practicalities.
“Education and awareness of global green standards is another challenge – ensuring issuers have access to the tools they need to understand best practices and the requirements of the exchange.”