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Stock exchanges are a key part of the capital markets, serving as a regulated venue where buyers and sellers trade securities and provide companies access to capital. But recently, Nasdaq has been expanding its traditional role, through market initiatives that help foster a greener world. At the 2022 Almedalen conference in Sweden, Fredrik Ekström, President of Nasdaq Stockholm, and Adam Kostyál, Nasdaq’s Head of European Listings, spoke about Nasdaq initiatives giving direction toward net-zero emissions.
“We are helping to finance the Green Transition,” said Ekström.
Conceived in 1968, Almedalen is a unique arena where stakeholders from corporations, politics, academia and civil society meet to discuss opportunities and challenges today. Below are some key takeaways from the event.
Stock Exchanges Bring Environmentally Conscious Investors to Sustainable Companies
The past 10 years have seen a sharp rise in climate-conscious investment, according to Kostyál, who noted that “companies today both see and count on value in sustainable investments.”
To help eco-conscious investors connect with authentic, environmentally-minded companies, Nasdaq created Green Designations, spotlighting companies that follow strict environmental guidelines, for investors looking for sustainable investments.
The designations have criteria that are broken out into two categories: [Insert RIGHT, Nasdaq Green Designations Labels]
Nasdaq Green Equity Designation Companies Require:
- More than 50% of their revenue derived from business activities considered green
- More than 50% of their investments allocated to activities considered green
- Less than 5% of revenue derived from fossil fuel activities
Nasdaq Green Equity Transition Designation Companies Require:
- More than 50% of their investments allocated to activities considered green
- Less than 50% of their revenue derived from fossil fuel activities
“It is important that the people who choose to invest in companies on Nasdaq Stockholm can make well-informed decisions based on transparency,” added Ekström.
Company participation in Nasdaq Green Designations continues to grow, with our first-ever “Green IPO” near the end of 2021. Rebelle (BELLE), a re-fashion site, went public with the Nasdaq Green Designation label. When the company hit the market, it was already equipped with the tools to attract environmentally conscious investors.
“By making visible which listed companies are leading the way in the transition, we make it easier for investors to let their money work for sustainability,” said Kostyál.
Companies Need Capital to Bring Sustainable Businesses and Initiatives to Scale
Throughout the conference, Kostyál emphasized the rising trend toward ESG-related investments.
“Increasingly, we see money invested on the stock exchange going toward companies that are considered pioneers within Environmental Social and Governance (ESG),” Kostyál said.
But ESG initiatives come at a cost for companies looking to transition to cleaner energy, invest in their own human capital or bring their sustainable business to scale.
To help all companies on the exchange raise the capital to deliver on their ambitious ESG goals, Nasdaq created its Sustainable Bond Market, the first and largest of its kind. With four specific types of sustainability bonds—Green Bonds, Sustainability Bonds, Social Bonds and Sustainability-linked bonds—the market allows companies to raise debt capital for investments with clear benefits to the environment.
As the connector between companies and investors, Nasdaq also created Nasdaq’s Sustainable Bond Network, connecting issuers with investors, empowering them to evaluate impact and make informed investment decisions on sustainable bonds.
Since its inception, the bond market has seen a wide range of participation, including the city of Helsingborg, Sweden, which listed a sustainability-linked bond as part of its efforts to reach net-zero emissions by 2035.
A Carbon Removal Market Can Accelerate the Transition to a Cleaner World
In the same way exchanges facilitate the green transition through raising capital, the role of an exchange, as the meeting place between companies and investors to raise capital, can actively foster it. Puro.earth, the world’s first marketplace to offer industrial carbon removal instruments, provides a market that is verifiable and tradable through an open, online platform.
The platform already provides carbon removal services to some of the world’s leading corporations like Microsoft (MSFT).
With the acquisition of Puro.earth, the creation of the world’s first and largest market for sustainable bonds and the development of a green designations label that connects climate-conscious investors to more sustainable companies, Nasdaq aims to be an active part of the climate solution.
Going forward, Nasdaq will continue to make it easier for the financial services industry to be part of the solution as well.
“We ensure [everyone] can be part of the green transition,” said Ekström.
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Image and article originally from www.nasdaq.com. Read the original article here.