The World Federation of Exchanges (WFE), the global body for exchanges and CCPs, has issued its Guidance Note on the WFE Green Equity Principles. The Principles are the first global framework for designating listed shares as green.
The WFE Green Equity Principles are based on 5 pillars:
- The amount of a company’s revenues/ investments that must be derived from ‘green’ activities
- Use of a specified taxonomy
- Governance (i.e. existing listing requirements)
- Annual assessment by approved reviewers
- Disclosure around the processes and reviews related to the green classification.
The Guidance Note sets out practical considerations for exchanges who wish to establish offerings that align to the WFE Green Equity Classification and covers the principles themselves, as well as operational matters such as:
- Designation of responsibility within the exchange for overseeing the classification
- Establishing relevant processes including criteria for revoking classification
- Development of the classification mark and provision of public information
- Criteria for assessing the appropriateness of reviewers
Nandini Sukumar, chief exec of the WFE, said in a statement: “The WFE Green Equity Principles are a significant milestone achieved by the global exchange industry. The Guidance Note, published today, equips aspiring exchanges with the tools to play their part in increasing transparency in sustainable finance and countering greenwashing risks as we move towards a more sustainable global economy”.