London Stock Exchange : UN SSE communication to stakeholders 2023 238.3KB •

5

What is your exchange's process for reviewing

The UK's Financial Conduct Authority (FCA), not the London Stock Exchange, is responsible for setting listing standards in the UK.

listing standards in general? Are there

The London Stock Exchange is a stakeholder in the policies set by the FCA and therefore contributes during consultations on listing rules. The London Stock

opportunities for stakeholders to comment

Exchange is responsible for the Admission and Disclosure Standards and where there are proposed changes, we consult with the market for comments.

during the process?

For example, ahead of launching our Voluntary Carbon Market and publishing Schedule 8 of the Admission and Disclosure Standards, we launched a public

consultation and and, as a result, refined the rules to include operating companies.

The London Stock Exchange is responsible for the rules and regulation of AIM. The rulebooks are updated via a consultation between the Exchange and the AIM

community to ensure they remain appropriate and pragmatic for growing companies.

6

How do you track sustainability reporting of

The London Stock Exchange reviews the data comprising its Climate Governance Score to assess how well public companies are integrating climate change

your listed companies?

considerations into their business strategies. We assess this on an annual basis to track how disclosure is improving market wide.

Issuers on our Sustainable Bond Market must comply with mandatory annual post-issuance reporting requirements to demonstrate continued eligibility for the

Sustainable Bond Market over the lifetime of the issuance.

Listed companies can track how their sustainability performance compares to their peers' through access to Refinitiv ESG data on the Issuer Services platform.

7

What incentives (i.e., public recognition/

LSEG offers one of the most comprehensive ESG databases in the industry. Issuers have access to LSEG ESG Data and Scores through the Issuer Services

awards) and sanctions do you have in place

platform which provides more than 600 metrics from 15,000 companies globally. Issuers are encouraged to use this feature to assess their performance against

to encourage disclosure and discourage non-

peers' and identify areas for improvement.

compliance/lower levels of transparency?

The London Stock Exchange provides access to an online Climate Governance Tool which helps companies understand their climate disclosure and carbon

management practices.

8

What connections have you made between

Our ESG Reporting Guidance builds on disclosure standards across the UK.

national sustainable development frameworks

In 2021, the FCA mandated TCFD-aligned disclosures by some public companies. The London Stock Exchange's Climate Reporting Guidance aids companies'

and goals, and your exchange's existing

understanding of the disclosure requirements and regulatory landscape with the intention of improving disclosure standards in our markets.

standards and norms?

FTSE Russell assesses ESG and green revenues disclosure and performance of companies globally and provides this analysis to investors around the world.

This data is also used to construct the FTSE ESG Index Series, which highlights companies that meet good practice standards. The Green Economy Mark cohort

must disclose their green revenues. Sustainable Bond Market issuers are required to provide annual disclosures and failure to do so may result in their instrument

being removed from the platform.

We have representatives that are members of the UK Voluntary Carbon Markets Forum and interact with the Integrity Council for Voluntary Carbon Markets

(ICVCM) and the Voluntary Carbon Markets Initiative (VCMI), which are all focused on scaling the global voluntary carbon market. We responded to the need to

scale voluntary carbon markets by launching a Voluntary Carbon Market to increase the flow of capital into new climate mitigation projects worldwide.

LSEG also has representatives that are members of the Green Taxonomy Advisory Group (GTAG) which is contributing to the development of a UK green

taxonomy, a common framework for sustainable investment.

The exchange participates in several ICMA working groups that are responsible for establishing and reviewing frameworks in the fixed income market. These

ICMA principles form some of the international principles to which we require issuers to adhere if they are to list on our SBM.

Through our membership and engagement with GFANZ and the Net Zero Financial Service Providers Alliance we are contributing to this transformative step in

embedding net zero across the whole financial system. We have committed to aligning all relevant services and products to net zero by 2050.

12

How has your exchange supported the

From the pioneers who are leading the green economy to the more carbon-intensive industry sectors making the transition to lower-carbon operating models,

development of financial products that address

the London Stock Exchange is committed to supporting issuers with access to capital and sustainable finance products and services across a range of asset

sustainability-related issues (e.g., ESG Indices,

classes.

carbon markets, social/environmental bonds,

In October 2022, we launched our Voluntary Carbon Market. This is a designation for funds or operating companies on AIM or Main Market that are focused

sustainable development funds, etc)?

on financing climate change mitigation projects which are expected to yield carbon credits. This provides an alternative solution to procurement for corporates

seeking access to a supply of carbon credits to augment their decarbonisation strategies.

Our Green Economy Mark recognises companies and funds on our markets deriving 50% or more of their revenues from products and services that contribute to

the global green economy. It helps to increase the visibility of issuers on London's markets that are contributing to achieving positive environmental objectives.

More than 100 companies and funds with a combined market cap of £150bn+ currently hold the Green Economy Mark.

The Sustainable Bond Market allows issuers of qualifying sustainable debt instruments to display bonds on the platform, providing access to the largest, most

sophisticated and long-term oriented investor base for sustainable debt finance.

Through our Issuer Services platform, London-listed companies can access the ESG data and scores of LSEG. Through this database, issuers can gain a global

view of ESG performance in their sector and understand best practice ESG disclosure.

Our Climate Transition Offering helps companies to prepare for the transition to low-carbon through access to tools, resources and education. Our Climate

Governance Score and Tool help companies to assess their carbon management practices. The Climate Reporting Guidance and complimentary training videos

help companies discover best practice climate reporting and TCFD implementation.

The Transition Bond Segment offers a solution for companies requiring access to capital to mobilise transition plans.

FTSE Russell, an LSEG business, provides more than 180 ESG and sustainable indices, including its established FTSE4GOOD index series which measures the

performance of companies demonstrating strong ESG credentials and the FTSE TPI Climate Transition Index Series which incorporates five key climate data

inputs from the TPI core assessments and FTSE Russell's climate framework.

There are more than 400 ESG ETF listings in London.

13

Are there any specific resources that you

The UN SSE should support exchanges to mobilise strategies in relation to achieving their commitments made under the Net Zero Financial Services Providers

would like from the SSE or other relevant

Alliance. The UN SSE can also use its convening power to promote engagement between exchanges around other important topics including social impact,

groups to help you in your sustainability work?

diversity and the carbon markets. In addition to resources for the exchanges to engage with exchange teams, it would be beneficial to target the materials

to issuers directly, e.g., best practice and disclosure and new environmental assets including carbon. The UN SSE should support regional carbon market

engagement and education to maximise success in the global south, e.g., Africa and South Africa.

14

Are there any specific requests you have

LSEG looks forward to continuing to collaborate with investors, issuers and regulators on the sustainable finance and investment agenda.

of investors, issuers and regulators in terms

It is key to the continued success of ESG disclosure that issuers understand how investors are transitioning capital allocations in response to ESG considerations.

of their role in advancing sustainability in

Therefore, we will keep placing emphasis on the importance of investor-issuer dialogue on ESG issues, as a complement to high-quality ESG data flows.

the market?

We recognise the importance of data and disclosure in directing capital towards sustainable economic activity and our policy advocacy asks that policymakers

introduce mandatory disclosures that align with ISSB and are consistent across private and public companies. We are also calling for greater disclosure of green

revenues data and mandatory transition plans.