November 2016 Sustainable Stock Exchange Highlights

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SSE INITIATIVE NEWS

Capital Market Leaders Gather in Marrakesh to Promote Green Finance
16 November 2016
While political leaders convened in Marrakesh for the United Nations Climate Summit (COP22), capital market leaders from around the world came together to discuss how regulators, stock exchanges and investors can promote the growing area of green finance, particularly in developing countries. The stock exchanges COP22 Side Event jointly organized by The Moroccan Capital Market Authority (AMMC), The Casablanca Stock Exchange, The Moroccan Central Securities Depository (MAROCLEAR), and the United Nations Sustainable Stock Exchanges (SSE) initiative.

UN Sustainable Development Goals impact on emerging countries and the role of stock exchanges
28 November 2016
At the African Securities Exchanges Association (ASEA) 20th Annual ASEA Conference in Kigali, Rwanda hosted by Rwanda Stock Exchange, the key elements on the new sustainable development agenda was explored to evaluate what role the exchanges may play and the peer-to-peer learning made possible by SSE. Representatives from the Johannesburg Stock Exchange, Nasdaq OMX and SSE made the case for what exchanges and regulators may do to enable innovative financing mechanisms which would facilitate investments towards the green economy.

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UPCOMING WEBINARS AND EVENTS

RI Americas 2016
6-7 December 2016
New York City
At RI Americas 2016, 300+ attendees from around the world will look into how the US election result could change responsible investment in America, action points from COP21 to COP22, what next year’s proxy battle headlines might be, whether there is a conflict between activist investing and declining returns, and other critical ESG issues.

ICGN-IIRC Conference
6-7 December 2016
London
This conference, jointly produced by the ICGN and International Integrated Reporting Council, will address how to properly integrate long-term value drivers in pursuing the success of companies – ultimately contributing to a more sustainable capital market system. Highly experienced commentators will share their perspectives on how to achieve ‘integrated thinking’ across governance, strategy, performance and future prospects and how this informs investment decision making.

Financial Stability Board Task Force on Climate-related Financial Disclosures 2016 Report 
14 December 2016
The Financial Stability Board Task Force on Climate-related Financial Disclosures announced on 17 November at COP22 in Marrakesh, Morocco that the release of its climate risk recommendations for the FSB will take place on Wednesday, 14 December 2016. The Phase I report was posted on April 1, 2016

Ceres Investor Initiative for Sustainable Exchanges Working Group
15 December 2016
Final working group webinar for 2016 for members of the Investor Initiative for Sustainable Exchanges Working Group will feature an update on SSEi and plans for 2017, as well as a guest presentation by the World Federation of Exchanges.

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LISTING STANDARDS AND GUIDANCE


Spain’s BME publishes voluntary sustainability reporting guide for listed companies
10 November 2016
Bolsas y Mercados Españoles (BME), the operator of all stock Markets and financial systems in Spain, has issued their voluntary ESG guidance. Like many members who signed onto the UN’s Sustainable Stock Exchanges (SSE) initiative they aimed to publish guidance by the end of 2016. The “Voluntary Market Guidance for Listed Companies for Corporate Reporting on ESG Information” by BME “strengthens its commitment to fostering business sustainability in Spain”.

JSE Announces Listing Requirements Changes To Update To New King IV Governance Code
1 November 2016
King IV has been launched on 1 November 2016 using a new “stakeholder centric model” in keeping with the United Nations 17 Sustainable Development Goals (SDGs), which 193 countries adopted in September 2015, including South Africa.. The JSE released an announcement regarding amendments to the JSE Listings Requirements subject to public consultation. The amendments are subject to public consultation and JSE “look[s] forward to receiving comments thereon”. The JSE expanded the mandatory board committees (audit committee and remuneration committee), to include the social and ethics committee, separate non-binding advisory votes by shareholders of the issuer at the annual general meeting on the remuneration policy and the implementation report, new requirement regarding disclosure around racial transformation (i) racial diversity disclosure at board level; and (ii) publication of their B-BBEE scorecard on their website mandatory. See Explanatory Memorandum and Amendment Schedule for more on changes. The JSE will seek implementation by Quarter 4 of 2017.

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GENERAL NEWS

NASDAQ: Why You Should Invest In Sustainable Companies
25 November 2016
Evan Harvey is the Director of Corporate Responsibility for Nasdaq in an interview by Chris Skroupa expresses diplomatically the philosophical challenge at the core of work in sustainable investment – making externalities internalities. One aspect is reporting, having companies report on all factors affecting business performance, including ESG factors.  “…but the push for ‘non-financial’ data is tricky. We are reluctant to overburden companies with regulation that constrains growth or slows the pace of job creation; but we also believe that some disclosure of these metrics is necessary to satisfy the materiality expectations of our investors.”

FEAS Annual Meetings were held in Sharm El Sheikh,Egypt on November 16-17, 2016.
21 November 2016
Following The Federation of Euro-Asian Stock Exchanges (FEAS) elections 16-17 November in Sharm El Sheikh, Egypt, the new management of FEAS sees EGX being Chair and MSM the Vice Chair. FEAS represents the Euro-Asia Region with currently 50 members. The Federation of Euro-Asian Stock Exchanges (FEAS) was established on 16 May 1995 in Istanbul with 12 founding members. Currently there are 33 members, 11 affiliate members, 3 observers and 4 bilateral members including post trade institutions, dealers associations and regional federations from 30 countries.

Environmental Finance: Interview with LSE on Green Stock Exchanges
7 November 2016
Lillian Georgopoulou of London Stock Exchange Green Stock Exchange talks green bonds, including LSE listing the first green bond issued outside of China by the Agricultural Bank of China. LSE has 39 green bonds listed on LSE’s dedicated green bond segments, that have raised nearly 10B USD, and are denominated in seven currencies.

World Federation of Exchanges appoints NSE’s Chitra Ramkrishna as chairperson 
4 November 2016
The World Federation of Exchanges (WFE), which represents nearly 45,000 listed companies, has appointed National Stock Exchange of India’s Managing Director and CEO Chitra Ramkrishna as its new chairperson. Headquartered in London, WFE represents more than 200 market infrastructure providers including exchanges and CCPs. Bolsa de Valores de Colombia (BVC) hosted the World Federation of Exchanges (WFE) 56th General Assembly & Annual Meeting in Cartagena, Colombia from 2-4 November 2016. Colombia is grouped by index maker MSCI in the Emerging Markets universe.

ESG ‘Key’ to Outperformance in Emerging Markets
3 November 2016
Environmental, social, and governance factors can have a significant positive impact on emerging markets portfolios, says a new study by Cambridge Associates, an investment consulting firm. The study, which compared the performance of two MSCI emerging market indexes over the last three years, found that the ESG index outperformed its parent index by a cumulative 12 percent on a total return basis. 367 basis points of annualized outperformance was achieved by the MSCI Emerging Markets ESG Index. 199 basis points were attributable to ESG factors after we accounted for the contribution of other factors such as country, currency, sector, and style.

Global ESG Sector Playbook
A new HSBC report on integrating ESG factors into 20 sectors, “Global ESG Sector Playbook: Ignore at your peril”, has been published by their London team. The report covers sector-by-sector review, arguing that “environmental, social, and governance issues have gone mainstream, are driving performance, and represent over 40% of sector value drivers”. The report runs thru 20 sectors integrating ESG into broader financial analysis, and how to engage with management. The report highlights 4 drivers (introduction of ESG fund ratings; US regulation on fiduciary duty; Paris climate agreement; asset owner pressures).

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ESG INDICES AND PRODUCTS

London Stock Exchange welcomes the listing of the first ever Chinese Green Covered Bond
11 November 2016
London Stock Exchange (LSE) on 11 November listed the Bank of China covered bond with face value of 500M USD due 2019. BOC already issued on Luxembourg Stock Exchange (LuxSE) in July 2016; LuxSE counts “more than 110 green bonds listed in 14 currencies by 24 issuers”. Investors in the LSE green covered bond were split between Asia and Europe, the issue was 1.8 times oversubscribed with a 1.875% coupon representing a credit spread of 95 basis points only over BOC’s existing senior notes. Net proceeds are “for ‘eligible’ Green projects across renewable energy, pollution prevention, clean transportation and sustainable water management” in the People’s Republic of China domestic. The transaction features an international green bond issue secured by green bonds that are traded on the China interbank bond market.

IFC Sells $152 Million Deforestation Bond in London
8 November 2016
IFC, a part of the World Bank Group, sold a first-of-its-kind 152M USD bond designed to protect forests this week. The bond, which aims to prevent deforestation in developing countries, will repay investors in either carbon credits or cash.  Carbon credits to be delivered to Noteholders are generated by the Kasigau Corridor REDD Project located in Kenya and owned by Wildlife Works Inc. and Wildlife Works Carbon LLC. IFC developed the Forest Bond with BHP Billiton, which provides a price-support mechanism for purchasing the carbon credits. Protecting forests around the world is “essential” to help meet global climate goals, Jingdong Hua, IFC vice-president and treasurer, said in the statement. The forest bond, listed on the London Stock Exchange, was sold to major global institutional investors including CalSTRS, Palafitte Investments, TIAA-CREF, and QBE.

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