For the world to achieve its ambitious emissions reduction targets and to keep global temperature rise to less than two degrees higher than pre-industrial levels, a whole economy transition to low-carbon is needed.
Investors are increasingly choosing to allocate capital to companies with clear frameworks for managing climate-related risks and opportunities to make sure their portfolios are climate resilient. Companies with carbon-intensive operating models must mobilise credible transition plans to future proof their businesses for a net-zero future.
We want companies on our markets to have the right tools to produce effective reporting on climate in order to maintain access to capital from sustainability-led investors and to foster clear and direct engagement between the users of capital and those who are providing it.
Transitioning to low-carbon starts with understanding your preparedness for a future in which all companies’ carbon emissions must be drastically reduced. Our new Climate Governance Score is an assessment of companies' carbon management practices and incorporation of climate change considerations into business strategies. It helps you understand where you are on this journey relative to your industry peers and the steps you can take to improve.
Companies in the FTSE Russell research universe can see their score in the Issuer Services platform on a confidential basis.
All other companies can use our online tool to self calculate their score and receive recommendations on how to improve their climate reporting and transition planning.
Access our educational resources to understand the climate-related data that is material to investors and how to report on it. Learn about the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), fast becoming the industry standard for climate-related reporting.
Our climate reporting guidance, which is based on the model guidance published by the UN Sustainable Stock Exchanges initiative (UN SSE), is designed to give practical advice to companies on implementing TCFD recommendations as well as provide a step-by-step guide to supporting companies on this journey. If you are integrating climate information into your reporting for the first time, this is a good place to start to build your reporting capabilities.
We are helping companies understand the growing and evolving requirements of investors and regulators on climate-related disclosure. Our video series, which is accessible to everyone on our Issuer Services platform, features practical training that will help you understand these requirements. The series is divided into two parts, comprising bitesize videos relating to different parts of TCFD. The videos can be viewed at your own pace and remain a readily accessible resource for companies to come back to as they develop their climate reporting capabilities.
London-listed companies are also invited to take part in two interactive training sessions facilitated by expert trainers on behalf of the UN SSE that will take place in 2022.
The public markets offer a solution for companies requiring access to capital to mobilise their transition plans. Whether this is debt or equity finance, companies with credible transition strategies can access sustainability-led investors to transform their businesses in preparation for the low-carbon economy.
The Transition Bond Segment, an expansion of our Sustainable Bond Market, supports more carbon-intensive industry sectors transition to lower-carbon operating models, offering issuers additional visibility to investors and broadening the sustainable finance marketplace. Find out more about the Transition Bond Segment.
London Stock Exchange has announced the development of a Voluntary Carbon Market which will support the listing of publicly traded funds that will be investing into carbon reduction and removal projects with the objective of generating carbon credits that may be issued to investors. In doing so, it will create a disciplined, transparent market, creating confidence that investors can support the development of high-quality climate change mitigation projects worldwide.
The Voluntary Carbon Market will be open initially to closed-ended investment funds, but in the future other asset classes will be considered.
We anticipate that the growing number of corporates with long-term needs for carbon credits will be the key investors. By investing in these listed funds, they will be able to augment credible net zero transition strategies by directly financing new projects to offset unavoidable carbon emissions during their path to net zero.
Read our CEO’s latest blog on the role of voluntary carbon markets or view our market consultation launched on 11th May, in which we welcome your feedback.