NSE webinar highlights growth in sustainable investing
In his presentation, Scharfe, who is CEO of LuxSE, said there has been a shift from the green bond market towards social bonds since the beginning of the pandemic.
The Nigerian Stock Exchange (NSE) hosted a special webinar today on the impact of COVID-19 on the global capital market. The online event, themed, “Capital Markets in a Pandemic,” featured discussions on the resilience of securities exchanges amid the unprecedented disruptions in the global economy caused by the pandemic.
The webinar brought together CEOs of various global securities exchanges, including Oscar N. Onyema, CEO of the Nigerian bourse; Nikhil Rathi, CEO of London Stock Exchange (LSE); Robert Scharfe, CEO of Luxembourg Stock Exchange (LuxSE); and Nandini Sukumar, CEO of World Federation of Exchanges (WFE). It was moderated by Eleni Giokos, a CNN correspondent.
The panel discussions provided investors and intermediaries insights into the business innovation and digital transformation of exchanges, capital-raising opportunities and growth in environmental, social, and governance (ESG) investing.
Also known as sustainable investing, ESG investing involves the assessment of ESG practices of businesses, including their environmental footprints and the social impact of their activities by investors. It entails assessing a stock beyond financial considerations.
According to a report by Deloitte Insights, the percentage of global retail and institutional investors that apply ESG principles to at least a quarter of their portfolios rose from 48 per cent in 2017 to 75 per cent in 2019.
According to a statement by the NSE, the bourse has recorded some achievements in the governance component of the ESG by creating governance-based indices and focusing on governance imperatives, while also working with stakeholders to address their environmental impact.
“We have worked to create green bonds in support of projects with strong climate credentials, as well as create platforms for both corporate and sovereign bonds. We are seeing great results,” Onyema said.
In his presentation, Scharfe, who is CEO of LuxSE, said there has been a shift from the green bond market towards social bonds since the beginning of the pandemic. According to him, over $20 billion has been raised in the sector for COVID-19 response. Social bonds are financial instruments used to raise funds to finance projects with positive social outcomes.
"The trends we have seen have indicated that COVID-19 may have been the trigger to shift ESG investments from a niche to the mainstream,” noted Scharfe. “This is an indication that investors are interested in these types of investments and I think this is just the beginning.”
Rathi, who is CEO of the London bourse, said there is an anticipated change in the nature of investing, while underscoring the growth in sustainable investing that the LSE has played a part in promoting. “We have seen an increased focus on ESG across asset classes and this push is coming from investors who want to see the impact of their investments,” said Rathi.
Onyema said although the COVID-19 pandemic has created disruptions in the global economy, financial markets, particularly, capital markets have shown resilience in supporting their economies. He said the NSE has ensured there are no disruptions to its operations.
In his remarks, CEO of World Federation of Exchanges, Sukumar, commended the global exchanges for their resilience and also reiterated the important role they have played in supporting economies during the pandemic.
"This resilience has not been an accident. Rather, we are seeing the result of a wide range of resources global exchanges have invested over a decade to prepare for a crisis such as this," Sukumar noted. “Stock exchanges exist to provide robust market structures that support issuers and investors and we have seen this resilience amidst the COVID-19 pandemic."
These revisions have been provided to improve on the perceived lacunas within the existing laws.
A green taxonomy can boost private sector investment in green or sustainable projects.
The agreement will enable the two exchanges to foster sustainable finance in their respective markets.
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