When LSEG Enters the Net Zero Race

LSEG becomes a Business Ambition 1.5° signatory and joins the Race to Net Zero emission. Wealth Monaco is voluntarily introducing more in detail each initiative and organization involved in the LSEG process.

In line with its last acquisition for $27 billion, of the financial market data and infrastructure provider having one of the richest ESG databases in the industry, Refinitiv, the London Stock Exchange Group (LSEG) has become the first global exchange group to commit to net zero.

Through the Business Ambition for 1.5°, a commitment of business leaders to align to science-based target proposed by the United Nations Global Compact (UNGC), LSEG hence becomes a member of the United Nations Climate Change ‘Race to Zero’ an initiative that keep updates of the progress made by each members of the coalition.

The Group’s science-based targets to reduce emissions in alignment with the Paris Agreement have also been approved by the Science Based Targets initiative (SBTi) a partnership between CDP (see our last article), UNGC, the World Resources Institute (WRI) an organization which develop research-based solutions to create change in the real economy with its approach “Count it, Change it, Scale it”,  and finally the World Wide Fund for Nature known as WWF, well known NGO

With this announcement, LSEG commits not only to reducing its emissions by 46% by 2030 but to engage all key suppliers (accounting for 57% of Scope 3 emissions) to set science-based targets by 2025.

As a comparison, the S&P Global has committed earlier this month to reduce absolute scope 1 and 2 GHG emissions by 25% by 2025 (from a 2019 base year) and that 81% of its suppliers by emissions covering purchased goods & services and capital goods, will have science-based targets by 2025. (Full list of companies engaged in SBTi is accessible here)

A countless change for every payers in the game to be effective within the next 4 years.

LSEG has also been a supporter since its launch in 2017 of the Task Force for Climate-related Financial Disclosures (TCFD) dedicated to develop consistent climate-related financial disclosures chaired by Michael R. Bloomberg, which has received the support of some 1,700 signatory organisations worldwide, from both the public sector, including governments, and the private sector.

LSEG encourages issuers to report against TCFD through their reporting guidance and aims to go further each year in embedding these standards into their own financial reporting.

Climate risks posing threats to ecosystems, societies, markets and to companies, a globally coordinated response is needed to mitigate and manage those risks ; for this reason LSEG is committed to taking action, supporting the growing drive to a net-zero carbon economy and use its position at the heart of global financial markets to act as a facilitator.

This decision was congratulated by Nigel Topping, UK High-Level Actions Champion for Cop26, UK Government – an annual conference around climate change :

“To achieve net-zero emissions requires transformation across the economy. LSEG with its data and analytics, post-trade and exchange businesses sits at the centre of capital markets which is why this announcement is so powerful. Not only is LSEG committing to net zero in its own operations and supply chain but critically is committing to playing its role in the transition to net zero of the marketplace through its influence with investors and issuers.”

LSEG targets to bring together investors and issuers in three critical areas:

  • Data and disclosure – catalysing consistent, comparable and reliable global climate data
  • Growth of the green economy – enabling the growth and development of green industries
  • Climate transition across all sectors – supporting investment and capital flows to achieve climate transition and resilience

As part of its efforts to drive action on climate change, London Stock Exchange will this week become the first exchange to launch a dedicated Transition Bond Segment. The segment will display debt instruments from issuers who have a corporate strategy or transition framework that is aligned to the Paris Agreement, including approved targets to achieve net zero, and discloses, manages and addresses climate-related risks in line with global standards such as the Climate Transition Finance Handbook, the CBI Transition Certification Framework and the Transition Pathway Initiative.

The new segment joins Green, Social, Sustainability, Sustainability-Linked and Green revenues bond segments to form London Stock Exchange’s Sustainable Bond Market (SBM). It has been developed following consultation with issuers, investors, LSEG advisors, and with input from LSEG Sustainable Bond Market Advisory Group.

To grow the green economy, London Stock Exchange’s Green Economy Mark launched in 2019, recognizes listed companies with 50% or more of their revenues derived from products and services that contribute to the global green economy, as defined by the FTSE Russell’s Green Revenues 2.0 Data Model. London Stock Exchange’s Sustainable Bond Market allows for Green Economy issuers with over 90% of green revenues to display their bonds on a dedicated green revenues segment.

Article: Joana Foglia – Source: Reuters, LSEG, FTSE, SBTi, TCFD

Post Author: Wealth Monaco