New WFE Research reveals what drives Sustainability progress at global Exchanges

New WFE Research reveals what drives Sustainability progress at global Exchanges

London, 21st July – The World Federation of Exchanges (WFE), the global industry association for exchanges and clearing houses, has published new research uncovering environmental, economic, and cultural factors that drive Environmental, Social, and Governance (ESG) progress across the world’s exchanges.

Drawing on a decade of data from the WFE’s annual Sustainability Surveys, the paper, “Drivers of Exchange Sustainability Development”, authored by Dr Kaitao Lin, Senior Financial Economist at the WFE and Dr Ying Liu, Financial Economist at the WFE, provides the first multi-year analysis of what shapes ESG strategies across 66 exchanges in 54 jurisdictions. The findings reflect a complex interplay of jurisdiction-specific factors, from governance quality, education levels, climate exposure, and cultural attitudes.

Research key findings:

• Governance is a priority: Exchanges allocate the largest share of their ESG efforts, 39% on average, to governance. This focus is strongest in jurisdictions with high literacy and low corruption.
• Sustainability and reputation drive action: Over the decade, sustainability concerns and reputational motivations consistently ranked as the most powerful drivers of ESG action, with regulatory pressure having grown in influence since 2017.
• Accelerating ESG product growth: The share of exchanges offering sustainability-related products rose from 28% in 2014 to 86% in 2023, driven by rising investor demand and growing environmental imperatives.
• Local cultural contexts matter: Societies in which individuals prioritise a future-oriented perspective over a short-term point of view, are more likely to support ESG innovation. Conversely, risk-averse cultures, and those with high power distance, and those where traditionally masculine values are prioritised, may be slower to adopt ESG initiatives, especially in governance and social efforts.
• Domestic environmental factors influence ESG innovation: Jurisdictions with greater forest cover and higher climate variability are more likely to develop sustainability-related financial products, such as ESG ETFs and indices.

Nandini Sukumar, CEO of the WFE, said, “We encourage policymakers and regulators to design targeted ESG frameworks that reflect national circumstances. In markets where ESG awareness remains low, public education campaigns, governance reforms, or incentives for sustainable financial practices could stimulate demand and strengthen market readiness. In more advanced or environmentally exposed economies, exchanges are leading sustainability product innovation and ESG data standardisation.”

Pedro Gurrola-Perez, Head of Research at the WFE, said, “For exchanges, the results emphasise the need to align ESG strategies with the socio-economic, environmental, and cultural realities of their jurisdictions. Exchanges operating in risk averse societies may need to take a gradual approach when introducing ESG innovations, ensuring that stakeholders perceive these initiatives as credible and low-risk. Conversely, exchanges in jurisdictions with high environmental performance or strong regulatory frameworks may leverage their position to lead in sustainability product innovation, using ESG as a competitive advantage to attract investment and differentiate.”

Read the full paper here.

For more information, please contact:

Cally Billimore                                             +44 7391 204 007

Communications Manager                      [email protected]

 

About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 37% are in Asia-Pacific, 43% in EMEA and 20% in the Americas. WFE’s 87 member CCPs and clearing services collectively ensure that risk takers post some $1.1 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. WFE exchanges, together with other exchanges feeding into our database, are home to over 49,054 listed companies, and the market capitalisation of these entities is $116.58 trillion; around $155 trillion (EOB) in trading annually passes through WFE members (at end 2024).

The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.

With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.

Website: www.world-exchanges.org

X: @TheWFE

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