Current global developments such as climate change, but also migration, progressing digitalisation and the establishment of social standards present politics, society and business with great challenges. High funding requirements will be needed globally for the sustainable reorganisation of whole branches of industry, the achievement of the 2-degree goal and the realisation of the United Nations’ Sustainable Development Goals (SDGs) as well as for financial compensation of damage as a result of climate change.

Even though there is a growing awareness of new opportunities and risks this change involves, and sustainable finance is increasingly gaining attention in the public eye, the economic implementation on the market is still a significant way behind this and needs to catch up. In order to take account of these changes in the near term, there will have to be a rethink in the financial industry and concrete structures will need to be established – the fundamental inclusion of sustainability criteria in the entire financial sector is essential. This specifically means, for example, that investment strategies that previously led a niche existence, such as medium- to long-term impact investing, need to increasingly reach the mainstream of international capital markets.

Ultimately, it is a matter of ensuring stability and sustainability of financial markets by taking the impact of business activities, the consideration of long-term opportunities and risks in the core business and sustainability criteria into account as the foundation of capital expenditure and investment decisions. Only in such an environment the financial services sector can fully live up to its responsibility in financing global transformation processes.

As an infrastructure provider, Deutsche Börse not only aims to provide markets but actively shapes them as well. It does this in awareness of its public service mandate and with the aim of establishing transparent and secure structures of integrity. It is precisely in this area that a stock exchange makes its contribution to society and fulfils its responsibility of sustainable development. This is because sustainable organisation of the financial industry is closely connected with future economic and social development and maintaining Germany’s attractiveness as an economic centre.

The topic of sustainable finance is gaining global importance with corresponding structures developing on the market. However, these structures can only be established together with all financial players. As regards our initiatives and their integration potential, we regularly engage in dialogue with our partners in business, society and politics – both on the national and international level. In addition to our collaboration with the German Council for Sustainable Development (Rat für nachhaltige Entwicklung, RNE), we are active as a member, and on the board, of econsense, the Forum for Sustainable Development of German Business. The exchange with other financial venues – for example, as part of the United Nations’ Sustainable Stock Exchanges (SEE) initiative, the Network of Financial Centres for Sustainability and the Sustainability Working Group of the World Federation of Exchanges (WFE) – also gives us important momentum to further advance sustainable finance.

Currently, Deutsche Börse Group’s offering via its index subsidiary STOXX includes around 100 sustainability indices, e.g. the STOXX^® ESG Leaders and STOXX^® Low Carbon index families. The volume amounts to around €12.5 million and there are currently 2 ETFs: the FlexShares STOXX^® Global ESG Impact index and the FlexShares STOXX^® US ESG Impact index. We see it as our responsibility as a capital market organiser to further advance this topic in economic implementation.

In connection with sustainable finance, ESG data (environmental, social and governance data) and its publication are of great significance. Core business-based ESG data allows a more holistic and above all forward-looking measurement of company value and is indispensable for extended financial key figures. This is because climate and environmental risks, social factors and aspects of corporate governance will play an essential role in risk assessment for the financial sector.

The information provided as part of companies’ reporting serves investors, asset owners and asset managers, for example, to be able to better identify opportunities and risks associated with their investment decisions and make sound decisions. By collecting ESG data, companies can identify risks along their value chain and manage these accordingly in order to ensure medium and long-term business success.

And last but not least, more transparency about possible cross-sector risks provides greater stability on capital markets. According to the international expert committee’s Peer Review Report, which evaluates the implementation of the German sustainability strategy every four years, the financial industry’s contribution has, however, so far been underdeveloped. Deutsche Börse supports the initiative through the Task Force on Climate-related Financial Disclosures (TCFD) as an important stimulus to more intensively discuss these risks and effects as financially relevant variables.