Securities regulators promoting sustainable finance, new UN report

Chair of the Financial Regulatory Authority of Egypt Dr. Mohammed Omran and Secretary General of IOSCO Mr. Paul Andrews at the 2018 SSE Global Dialogue

(23 October 2018) Leveraging its platform for bringing stock exchanges together with other actors in the investment chain, the United Nations Sustainable Stock Exchanges (SSE) initiative released a new report during the SSE Global Dialogue, which was held during UNCTAD’s 2018 World Investment Forum. The report focuses on how securities regulators can help promote the SDGs. With 35 examples from 19 markets, the report provides a snapshot of what is happening around the world today.

“In jurisdictions around the world, securities regulators are taking actions to support sustainable development, but we are facing the challenge of having to do much more to meet our global goals,” said James Zhan, Chairman of the SSE Board and Director of Investment and Enterprise at UNCTAD. “This report shows how securities regulators are beginning to recognize the urgency in which we must act, and provides an action plan to accelerate momentum.”

“We welcome this area of work from the SSE, as the work of security regulators is critical if we are to create a sustainable financial system that can contribute to the Sustainable Development Goals, while providing beneficiaries with a positive return on their investments. While we have seen a surge in much-needed regulation related to sustainability in recent years, in order for this regulation to be truly effective, we need to set more clear objectives and more integration with broader financial regulation. Through both the SSE and our own policy work at the PRI, we stand ready to support the work of security regulators in helping to create a truly sustainable financial system,” said Fiona Reynolds, CEO of Principles of Responsible Investment (PRI).

To create a financial system that enables the creation of sustainable, equitable economies, all the players in that system must work together toward a shared goal. With the agreement around the UN’s Sustainable Development Goals (SDGs) there is a global framework to work towards.

The sustainability issues identified by the SDGs can create financially material risks and opportunities for investors. The SSE’s report examines how, within security regulator’s existing mandates, action can be taken on sustainability-related risks and opportunities.

The report was produced with an Advisory Group made up of nearly 70 capital market stakeholders. Recognising that there can be no one-size-fits-all approach, the report aims to facilitate the sharing of experiences, and presents a range of actions that are supplemented by examples of what securities regulators have already done.

The Chair of the SSE Advisory Group on Securities Regulations and Executive Chairman of the Financial Regulatory Authority in Egypt, Dr. Mohammed Omran, said “this new SSE research provides a constructive framework and practical set of illustrative examples to help securities regulators further explore how they can encourage investment in sustainable development.”

“In this guidance, the SSE outlines key considerations for securities regulators and identifies areas in which they can most usefully focus their efforts to uphold their responsibilities as regulators while helping to align capital markets with the needs of the future via the SDGs,” said Mary L. Schapiro, 29th Chair of the U.S. Securities and Exchange Commission.

Continued learning

As regulators are continuing to innovate and initiate new activities aimed at supporting or promoting sustainable finance and the SDGs, the SSE Report launched on 23 October will be supplemented by an online database of examples of regulators that are already supporting sustainable development. For example, the Hong Kong Securities and Futures Commission (SFC), a member of the SSE Advisory Group on Securities Regulators, launched in 2018 its Strategic Framework for Green Finance. To foster the development of sustainable and transparent capital markets, the SFC is taking steps that aim to enhance the disclosure of environmental and climate-related financial information by listed companies, work towards disclosure of ESG integration by asset managers, develop appropriate disclosure guidance for green investment products and facilitate their listing and trading.

“We are delighted to be part of the UN SSE Advisory Group on Securities Regulators initiative to publish this Report. The Hong Kong SFC’s Strategic Framework for Green Finance was issued on 21 September 2018, and aims to enhance environmental and climate disclosures by listed companies, as well as strengthen ESG integration by asset managers. These initiatives align with the SFC’s regulatory objectives to develop fair and transparent markets, and complements mainland China’s green finance development,” said Ashley Alder, CEO of the Hong Kong Securities and Futures Commission.

Furthermore, the SFC supports capacity building in green finance, and continues to explore cooperation opportunities with local and international bodies.

If you would like to contribute to the database and submit an example, please email info@sseinitiative.org.

To find our more about how securities regulators are working to promote the SDGs, visit www.SSEinitaitive.org/securities-regulators

About the SSE

The SSE initiative is a UN Partnership Programme organised by UNCTAD, the UN Global Compact, UNEP FI and the PRI. The SSE’s mission is to provide a global platform for exploring how exchanges, in collaboration with investors, companies (issuers), regulators, policymakers and relevant international organizations, can enhance performance on ESG (environmental, social and corporate governance) issues and encourage sustainable investment, including the financing of the UN Sustainable Development Goals. The SSE seeks to achieve this mission through an integrated programme of conducting evidence-based policy analysis, facilitating a network and forum for multi-stakeholder consensus-building, and providing technical assistance and advisory services.

Bookmark the permalink.