London Stock Exchange today announces the launch of two initiatives supporting sustainable finance on its markets. The Green Economy Mark recognises listed companies with 50% or more of revenues from environmental solutions, while the Sustainable Bond Market (SBM) incorporates new Sustainability, Social and Issuer-Level Segments. These initiatives are designed to support issuers implementing sustainable business models, and investors who are increasingly focusing on environmental products and services supporting the transition to a low carbon economy.
The Green Economy Mark recognises companies and investment funds on all segments of the Main Market and AIM that derive 50% or more of their total annual revenues from products and services that contribute to the global green economy. The underlying methodology incorporates the Green Revenues data model developed by FTSE Russell. The Mark captures both ‘pure-play’ green technology companies, as well as those across industries that make significant contributions to the transition. The Green Mark is offered to issuers on a voluntary basis.
The Sustainable Bond Market (SBM) builds upon the success of London Stock Exchange’s Green Bond Segment, launched in 2015. The Sustainable Bond Market includes new dedicated segments for social and sustainability bonds, in addition to the existing Green Bond Segment. These new segments further enable investors to distinguish between different types of sustainable bonds, based on independently verified frameworks and use of proceeds.
In addition, London Stock Exchange has created a new Issuer-Level Segment for bonds by issuers whose core business activity is aligned with the green economy. This enables eligible green economy businesses with more than 90% green revenues to admit bonds to SBM. London Stock Exchange has also introduced mandatory annual post-issuance reporting requirements for issuers on SBM, to provide transparency to investors on the ongoing use of proceeds and demonstrate continued eligibility to SBM over the lifetime of the bonds.
Nikhil Rathi, CEO, London Stock Exchange plc & Director of International Development, LSEG said: “London Stock Exchange Group’s position at the heart of global financial markets means that we are ideally placed to support issuers and investors in the transition to a sustainable, low-carbon economy. As a leading centre of green finance, London Stock Exchange was the first major exchange to launch a dedicated Green Bond Segment and is now the first to introduce a green economy classification for equities.
“We continue to see growing investor demand for actionable climate related financial information, with global asset allocations to green and sustainable finance increasing each year. The launch of the Sustainable Bond Market and the Green Economy Mark underline our commitment to finding innovative solutions to support issuers and investors in the transition to a greener economy.”
London Stock Exchange is also consulting with issuers, investors, advisors and the wider market on principles and classification criteria with the aim of creating a Transition Bond Segment. London Stock Exchange intends to continue dialogue with the market and is exploring introducing a segment to support companies across industries in their transition to low-carbon, sustainable business models.