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Market trends
Pamela Styles
|
March 19, 2019
6 min read
The New York Stock Exchange launched a central repository of ESG reporting resources on its public access website on March 3, 2017. This, plus other recent expansions by NYSE in its general positioning on ESG/Sustainability, should surely capture attention. This strategic move shows they are taking the maturing sustainability field seriously concerning mainstream capital market considerations.
In the past two years, sustainability investments have accounted for about 26%, or $22.89 trillion, of all professionally managed assets worldwide as of 2016 – a 25% increase since 2014.
Sustainability investment strategies used in the two largest capital markets now stand at:
Investment assets distribution does differ geographically:
Specific to green bonds, Standard & Poor’s [$SPGI] just announced two new product initiatives in its S&P DJI Green Bond Select Index, which launched on March 9, 2017. Its S&P Global Rating found a new Green Evaluation Service on April 26, 2017. The latter was advertised as “a comprehensive approach to measuring sustainability at the asset level” and separate from the traditional S&P credit ratings.
Given these and other related trends, I decided to run a few AlphaSense queries focused on U.S. capital markets sector companies. I ran queries for ESG, environmental investment funds, and green bonds. My question is, could I find evidence that competitive companies are using sustainability to attract investor capital?
The answer was yes. I found three categories of results:
My AlphaSense searches were narrow by design and only captured publicly traded investment institutions that essentially advertised ESG related activity in their newest annual report/proxy filings or press releases. So, the examples below provide just a glimpse of competitive action in the capital markets.
Rating agencies – indexes
The index series “builds on the research firm’s proprietary Sustainability Ratings for over 20,000 funds and equity research on 1,400-plus companies… based on company-level ESG research and ratings from Sustainalytics, an independent data provider.”
This announcement came in quick succession to its Morningstar Sustainability Rating launch on March 1, 2016.
This announcement was made shortly after MSCI’s announcement (below). Together with S&P Dow Jones Indices, RobecoSAM publishes and maintains the Dow Jones Sustainability Index (DJSI).
All four of the Exchanges that came up in the AlphaSense search advertised their affiliation with the Sustainable Stock Exchanges Initiative (SSE) and some of their sustainability-related listings.
To augment the results for NYSE [parent $ICE] and Nasdaq [$NDAQ], I ran two quick internet queries, “NYSE + Sustainability” and “Nasdaq + Sustainability.” The top result for each found landing pages with the following positioning (plus rich content scrolling further on their respective pages):
Two foreign exchanges came up in the AlphaSense search interestingly. EuroNext NV [$ENX.NL] advertised various green bond listings and trading volumes. The London Stock Exchange Group [$LSE. G.B.] was advertising that it has been a leading innovator in the space of green bond issuance and was the first exchange to join the climate bonds initiative. Also, that there are currently 40 green bonds listed in London, which have raised a combined US$10.5 billion across seven currencies and a diverse set of issuers.
Green bonds
NYSE, the oldest U.S. stock exchange, Nasdaq, and many mainstream institutions are taking sustainability seriously as a strategic opportunity to compete for capital. Are you?
Pamela Styles is principal of Next Level Investor Relations LLC, an Investor Relations consultancy with dual I.R. and ESG/Sustainability specialties.
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