Swiss stock exchange stays on sustainability initiative sidelines

SIX stock exchange chairman Urs Rüegsegger is weighing up the merits of voluntary versus mandatory rules. KEYSTONE/Ennio Leanza

Nearly 80 trading venues including the New York Stock Exchange (NYSE), the London Stock Exchange and Nasdaq have joined the United Nations’ Sustainable Stock Exchange (SSE) initiative, which tackles climate and social issues. The SIX Swiss Exchange, however, is one of the few major markets that remains on the sidelines.

Following a recent IPCC reportExternal link warning of dire consequences of global warming, the United Nations Conference on Trade and Development said developing countries need $3.9 trillion in private sector investment to meet Sustainable Development GoalsExternal link. Current investment levels fall short by $2.5 trillion annually.

“If we want to stimulate SDGs, we need to start with fund managers, executives from stock exchanges and bond markets, to mobilise capital markets”, said James Zhan, director of UNCTAD’s division of investment and enterprise.

He told swissinfo: “CEOs of stock exchanges wrote to us that they are committed to promoting sustainable development, green growth through stock exchanges as their platform”.

Out in the cold?

Some 30 stock exchanges boosted the SSE initiativeExternal link when they joined during the Paris Climate Summit.

But despite the SSE’s Geneva base, Switzerland’s own SIX exchange has so far not participatedExternal link, in spite of interactions between the two parties over several years.

The Zurich-based exchange – part of the SIX Group – lists 264 companies and has a market capitalization of some $1.7 trillion.

SIX Swiss Exchange chairman Urs Rüegsegger, told swissinfo that an internal discussion on joining was pending, and that recent changes at the helm of the exchange may have slowed the process. Rüegsegger himself last year stepped down as CEO of the SIX group, before Jos Dijsselhof, the former CEO of Euronext in Amsterdam took over.

Rüegsegger, who also chairs the World Federation of ExchangesExternal link, was in Geneva this week at the SSE’s annual meeting between heads of the world’s most important stock markets, market regulators, and investors. The gathering took place within UNCTAD’s annual World Investment Forum.

“We decided that if we are not in the initiative it doesn’t mean that we do not support ESG [environmental, social and governance investment policies]”, Rüegsegger said.

Anthony Miller, the SSE coordinator at UNCTAD explained: “They are doing quite a lot on sustainability, the kinds of things we recommend exchanges do: to initiate sustainability indices, to stimulate training and to introduce guidance for issuers on sustainability reporting.”

Voluntary or mandatory?

SIX takes a voluntary approach towards sustainability reporting by listed companies.  Since 2017 companies “may inform the exchange that they are producing a sustainability report according to internationally recognized standards”. 

Nestlé, Novartis and Credit Suisse are amongst those who have opted to publish sustainability reports.

The SSE’s online database of global stock exchangesExternal link lists SIX as promoting sustainability on its own website, and being committed to the internationally reporting guidelines of the Global Reporting InitiativeExternal link (GRI).  

The Swiss exchange also offers a sustainability index called SIX Sustainability 25 that includes Swiss companies.

But with public concerns about whether enough is being done about sustainability and social responsibility by large companies such as those listed on the Swiss Exchange, some feel time is running out.

Michael Zimonyi of the Climate Disclosure Standards Board (CDSB) says that while “voluntary initiatives do a lot to start the process, you are not going to achieve much from the entire market without some sort of binding requirements”.

But Rüegsegger has reservations about imposing a mandatory regime.

“It is not up to the exchanges to divide the world into good and bad. But it is our role to say what are the disclosure standards and allow investors a fair assessment on ESG, and then make a decision on whether to invest their money or not,” he said.

No pressure applied

Better harmonization of standards for reporting on sustainability performance by companies was needed, he said.  This may spawn the creation and marketing of more financial products with sustainability criteria.

But despite of the non-binding nature of the United Nations’ initiative, the question remains as to when SIX may join the other exchanges under SIX’s new CEO.

SEE coordinator Anthony Miller emphasized that the SSE team was not on the phone urging parties to join.

“Switzerland was one of the last countries to join the UN. The Swiss do like to consider things very carefully before making decisions,” he told swissinfo. “We will be happy to welcome the Swiss exchange if they decide to join one day.”

Sustainable Stock Exchange initiative

After SSE was first launched at the UN in 2009, some 30 stock exchanges boosted the initiativeExternal link when they joined during the Paris Climate Summit.

The initiative is organised by UNCTAD, the CEO-supported UN Global CompactExternal link, the United Nations Environment Programme Finance Initiative (UNEP FI) and Principles for Responsible Investment, a UN-supported network of investors.

 It provides an informal framework “to build the capacity for stock exchanges and market regulators to promote responsible investment in sustainable development”, according to its website.

It offers technical assistance to stock exchanges in developing countries and dialogue amongst members.

Partners commit to encourage listed companies to guide investors and fund managers to implement environmental, social and governance (ESG) policies within their own institutions and do the same in-house. The initiative also strives to get investors and fund managers to develope indices to promote investing in companies committed to sustainable development.