2022 saw the launch by the London Stock Exchange of the world-first Voluntary Carbon Market designation, which enables companies to channel capital into climate change mitigation projects worldwide to help increase the global supply of “high-quality” carbon credits.
It allows a fund or an operating company to raise capital from investors, which will be invested into climate change mitigation projects, like reforestation or carbon capture and storage, possibly alongside other climate-aligned assets.
The focus on providing finance to projects that will build scale and integrity on the supply side of the market is a unique approach, the London Stock Exchange said. It is applying the public markets regulatory framework to bring greater confidence, transparency, and scale to an asset class that has real potential to be a key part of the fight against climate change.
Meanwhile, the London Stock Exchange also said it provides valuable tools to corporates to help prepare for the low-carbon transition such as its Climate Governance Score, which helps companies assess their carbon management practices and incorporation of climate change considerations into business strategy. It also helps companies understand performance relative to their industry peers and provides insights on how to improve.
The London Stock Exchange also worked closely with issuers such as Uruguay, Chile, Mexico, the Public Investment Fund of Saudi Arabia, Riyad Bank, SNB, ICBC, and Shanghai Pudong Development Bank, as they brought their sustainable bond transactions to the Sustainable Bond Market. This was “despite challenging macro-economic conditions”, it said.
In 2023, it saw the issuance of NatWest’s first ever gender-aligned note, KEXIM’s blue bond, and OPEC Fund’s benchmark sustainability bond, among others.
Today there are more than 400 active bonds raising a total of £175 billion ($223 billion) on the exchange’s Sustainable Bond Market.
Also last year, it partnered with TreasurySpring to offer users the opportunity to access sustainable short-term funding by recognising sustainable issuers, using data from its Sustainable Bond Market, Green Economy Mark, and ESG data and scores.
Julia Hoggett, chief executive officer of the London Stock Exchange, said: “We play a critical role in mobilising the huge amount of money needed to support the just transition to a low carbon economy and enable sustainable economic growth.
“We are driving capital through our Green Economy Mark, Sustainable Bond Market, and Voluntary Carbon Market. But as a global financial market infrastructure and data, indices, and analytics provider, we are also driving standards in ESG data and disclosure, which is essential to help maintain London’s position as a high-quality and attractive international market to raise sustainable capital.”
FTSE Russell, an LSEG business, won Climate index provider of the year in this year's Sustainable Investment Awards.