29 July 2022

Growing the green economy and the role of financial markets

See who is playing an important role in in the global green economy - discover the companies and funds building a greener future in the latest London Stock Exchange report

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Author: Julia Hoggett – CEO, London Stock Exchange

To meet our greatest environmental challenges, whether that is in the form of the just transition to net zero, or tackling biodiversity loss, we must ensure that, globally, our financial ecosystem supports our natural ecosystem.

Such a transformation requires the realignment of capital on a huge scale, backing our scientists and entrepreneurs, bold and coordinated policy making, and for these to converge in new and innovative ways. The will is there: businesses are adapting; policy is evolving; and finance is mobilising. However, we need even greater momentum – more needs to change and at greater speed. We need to go further and faster in both setting and delivering sustainability targets. We must transform our global economy into a global green economy.

In London, there is no better example of how the real economy is mobilising behind this aspiration than that represented by the cohort of companies and funds that have earnt the Green Economy Mark.

In this green financial ecosystem, LSEG plays a pivotal role in three key areas: we are facilitating capital flows towards the green economy and the low carbon transition; we are building and fostering dialogue between companies, investors and policy makers; and we are advocating for higher, more uniform standards of disclosure and data to enable capital to flow in the right direction.

LSEG offers the broadest range of sustainability markets, products, and services of any global stock exchange. Our Green Economy Mark recognises London-listed companies generating more than half their revenues from green environmental products and services; our Sustainable Bond Market helps direct debt finance into the green economy, including the low carbon transition, as well as projects working towards wider social goals. Our plans for a Voluntary Carbon Market designation will support the listing of carbon funds that will help channel the financing we need to the projects we need to fight climate change.

But our direction of travel is more profound and far-reaching: it is towards Environmental Social Governance (ESG) being "business as usual," a future in which ESG and the net zero transition are embedded in the valuation of every asset, considered in every investment decision.

For investors, we are supporting better ESG disclosures so that they obtain more data from more companies. In October 2021, the London Stock Exchange was the first exchange to issue climate reporting guidance based on the UN Sustainable Stock Exchanges' Model Guidance on Climate Disclosure, which is aligned with the Task Force for Climate Related Financial Disclosures (TCFD) recommendations. The guidance provides a very practical template to support companies to evaluate the risks and opportunities related to climate change that are inherent in their operations.

Read the full report to discover which companies and funds make up the Green Economy Mark cohort

LSEG is also a founding member of GFANZ - the Glasgow Financial Alliance for Net Zero – which has ambitions to be a powerful force for change. GFANZ has grown to include over 500 organisations, representing around 40% of global private financial assets, committed to achieving net zero by 2050. LSEG is proud to be part of this global coalition, and to be working alongside our peers in the Net Zero Financial Service Providers Alliance to align our products and services with net zero by 2050.

We support the Transition Pathway Initiative (TPI) and its research programme and future plans to increase the coverage of the transition data to over 10,000 corporate entities across different asset classes.

We are also a global provider of data and analytics and have a broad and comprehensive sustainability offering in this space. Through FTSE Russell and Refinitiv, we offer a range of ESG data products and green finance indexes to help investors identify green investment opportunities. For example, FTSE Russell now provides Paris Aligned tilts to all its major indices, allowing passive investors to align their portfolios to the transition to net zero. The enormous data capabilities of LSEG are enabling capital to flow in the right direction for a greener economy.

Finally, it is important that LSEG, as a listed business, holds itself to a high sustainability standard. We have therefore set a science-based target to reach net zero by 2040 and have published our Climate Transition Plan to deliver this where we explain our commitments and approach, covering both our near-term targets and how we will identify actions required beyond 2030.

We are rapidly running out of time to create a sustainable, green economy. Through London's markets, new innovative companies, specialist investment funds and traditional global corporations are accessing the capital needed to accelerate the transition. Our third Green Economy Report celebrates the 108 companies and funds now accredited with the Green Economy Mark and recognises their efforts in building a greener future for everyone.

Read the full report

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