(24 April 2019) The Sustainable Stock Exchanges (SSE) initiative joined the International Finance Corporation (IFC), S&P Dow Jones Indices, and the Federation of Euro-Asian Stock Exchanges (FEAS) to discuss the latest trends in ESG and impact investment at the Arab Federation of Exchanges (AFE) 2019 Annual Conference in Cairo. The panel introduced AFE participants to the growing appetite for sustainable investments from international investors, and how exchanges and other market participants could capitalize on this market segment.
“The multi-trillion dollar market for sustainable finance is creating a clear demand for data, transparency, and standardization – all areas where exchanges already play a natural role. Listed products, including green bonds and ESG indices, are a critical way for exchanges to distinguish themselves to issuers and investors,” said Howard Li from the UN Global Compact, representing the SSE initiative.
Rodney Fernandes, Managing Director at S&P Dow Jones Indices, explained the investor rationale behind this demand shift: “We are seeing exponential growth in client demand for ESG products. And there is performance data to back it up, including in the MENA region. Our S&P Pan-Arab ESG index has outperformed its benchmark by 2% annualized since inception.”
The panel also touched on several areas where exchanges could work to promote sustainability in their markets including green finance and ESG disclosure. While these topics are still nascent in the region, attendees acknowledged that sustainability could be an important driver of international investment inflows in the near future.
Hosted in Cairo by the Egyptian Exchange (EGX), the AFE Annual Conference aims to facilitate the exchange of knowledge and encourages the transfer of best practices across the MENA region.
EGX has been a member of the SSE initiative since 2012 and has been a regional leader on sustainability issues, launching an ESG index with S&P in 2010 and issuing ESG reporting guidance for listed companies in 2016. IFC and the SSE have an ongoing collaboration on disclosure and transparency in emerging markets to help local stock exchanges to produce ESG rules that meet specific needs and enhance emerging markets investments.
About the SSE
The Sustainable Stock Exchanges (SSE) initiative, launched in 2009 by the UN Secretary General, is a UN Partnership Programme of the UN Conference on Trade and Development (UNCTAD), the UN Global Compact, the UN Environment Program Finance Initiative (UNEP FI), and the Principles for Responsible Investment (PRI). The SSE convenes stock exchanges who join by signing a voluntary public commitment and it currently has 78 Partner Exchanges worldwide. It provides Model Guidance on ESG disclosure for stock exchanges to help with the preparation of ESG reporting guidelines. The SSE has three inter-related pillars of activity: research, consensus building and technical assistance.