After environmental, social and governance (ESG) investing has moved into the mainstream over the past couple of years, the World Federation of Exchanges (WFE) is launching the WFE Green Equity Principles, a global framework for identifying and appointing shares as green. Nasdaq collaborated closely with the WFE and contributed to the development of this global framework from Nasdaq’s own Green Designations, a marker for equity issuers in our European markets to increase visibility and transparency toward investors looking for sustainable investments.
The WFE Green Equity Principles will enable exchanges to promote access to capital for issuers with primarily green activities, provide investors with more information to help in their investment decision-making, allow issuers to raise their profile among investors committed to sustainability and increase visibility of issuers’ green credentials and commitment to the green economy.
To qualify for the WFE Green Classification, issuers must meet certain criteria that falls under a definition based on five overarching pillars:
The criteria attached to these principles aim to counter greenwashing and support the flow of funding towards more sustainable economies.
Two years before the WFE established its Green Equity Principles, Nasdaq was ahead of the curve, launching its own Green Designations in 2021. While WFE’s Green Equity Principles are aligned with Nasdaq’s Green Designations, there are a few key differences.
The Nasdaq standard is slightly more rigorous as it also encourages companies to keep an elevated level of green investments. For its two designations, Nasdaq also has exclusion criteria for revenue from fossil fuels.
Nasdaq’s Green Designations make space for companies in transition, currently investing to become green with the Green Equity Transition Designation.
Green Designations is just one of Nasdaq’s ESG offerings as Nasdaq has expanded its suite of solutions over the past few years, establishing itself as an active partner in every stage of our clients' ESG journey.
In addition to Green Designations, Nasdaq provides an ESG advisory program for companies looking to create a defined, future forward ESG strategy, and software solutions that help companies parse through the many frameworks required to report out ESG initiatives to stakeholders, such as Nasdaq OneReport and our recent acquisition of Metrio. Nasdaq also owns a majority stake in Puro.earth, the world’s leading crediting platform for engineered carbon removal.
WFE’s work to bring a global minimum standard to green equity issuers addresses a critical demand in the ESG space, and Nasdaq believes market standardization will battle greenwashing while advancing the global effort toward green markets.