Developing the green economy and the role of financial markets

Find out who plays an important role in the global green economy – find out which companies and funds are building a greener future in the latest report from the London Stock Exchange

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Author: Julia Hoggett – CEO, London Stock Exchange

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

Such a transformation requires the realignment of capital at scale, supporting our scientists and entrepreneurs, developing bold and coordinated policies, and for these to converge in new and innovative ways. The will is there: companies are adapting; politics evolves; and finance is mobilizing. However, we need even greater momentum – more and faster change is needed. We need to go further and faster in defining and achieving sustainability goals. We need to transform our global economy into a global green economy.

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

In this green financial ecosystem, LSEG plays a pivotal role in three key areas: we facilitate capital flows to the green economy and the low carbon transition; we build and encourage dialogue between companies, investors and policy makers; and we advocate for higher and more consistent disclosure and data standards to keep capital flowing in the right direction.

LSEG offers the widest range of sustainability markets, products and services of any global exchange. Our Green Economy brand rewards London-listed companies that generate more than half of their revenue from green environmental products and services; Our sustainable bond market helps direct debt financing towards the green economy, including the low-carbon transition, as well as projects aimed at broader social goals. Our plans for a Voluntary Carbon Market designation will support the list of carbon funds that will help channel the financing we need to the projects we need to fight climate change.

But our direction is deeper and more ambitious: it is towards “business as usual” Environmental Social Governance (ESG), a future in which ESG and the transition to net zero are integrated into the valuation of each asset, considered in each investment decision.

For investors, we support better ESG disclosures so they get more data from more companies. In October 2021, the London Stock Exchange was the first exchange to publish climate reporting guidelines based on the United Nations Sustainable Stock Exchanges Model Climate Disclosure Guidelines, which are aligned with the recommendations of the Task Force on Climate Change. climate-related financial information (TCFD). The guide provides a very practical model to help companies assess the risks and opportunities related to climate change that are inherent in their operations.

Read the full report to find out 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 aims to be a powerful force for change. GFANZ has grown to include over 500 organizations, representing approximately 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 work alongside its peers in the Net Zero Financial Service Providers Alliance to align our products and services to net zero by 2050.

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

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

Finally, it is important that LSEG, as a listed company, conforms to a high sustainability standard. We have therefore set a science-based target to achieve net zero by 2040 and published our climate transition plan to achieve it, in which we explain our commitments and our approach, covering both our short-term targets and how which we will identify the necessary actions beyond 2030.

We are rapidly running out of time to create a green and sustainable economy. Through the London Markets, innovative new companies, specialist investment funds and traditional global companies access 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 recognizes their efforts to build a greener future for all.

Read the full report