Euronext has today announced the launch of an “ESG profile” to centralise data from issuers, amid a series of other sustainability announcements including a pre-IPO education programme for firms on ESG, a new biodiversity index, and a foundation.
The profile, announced as part of the group’s annual sustainability week, will offer a centralised location for ESG data points for the close to 2,000 issuers listed across Euronext exchanges.
The data points, which will be taken from SFDR principal adverse indicators, the CSRD and the EU taxonomy, include GHG emissions, taxonomy-aligned revenue and percentage of women in the workforce. The roughly 30 selected data points are designed to provide a broad snapshot.
The profile will also highlight ESG-labelled bonds issued by a firm and note membership of any Euronext ESG index. Issuers can upload additional documents and ESG ratings to profiles, and those who take an effort to customise their profiles will be given higher visibility.
One motivation for creating the profile tool was to reduce requests from investors for data from listed companies, especially as many Euronext-listed issuers are SMEs. Euronext hopes the profile will help investors to access relevant ESG data.
Asked about the issue of reporting burdens and increasing reporting requirements in Europe, Euronext CEO Stéphane Boujnah said that the market is in a transition phase as investors look for common alignment on currently fragmented standards.
“What we need to do is address not the definition of the standards, but the accessibility and visibility of the fundamental underlying data,” he said. “The fact that the convergence of standards has not been achieved yet should not be a prerequisite for contributing homogenous data, at least for the companies that are part of the Euronext world.”
However, while he acknowledged there was a decrease in listings because of other fundamental reasons related to market dynamics, he said he had never heard evidence of companies being discouraged from listing because of ESG reporting requirements.
Staying on the topic of IPOs, the group is planning a major integration of ESG into pre-IPO training for issuers looking to list. Starting in 2024, the group will launch new modules on ESG for its pre-IPO educational programme, putting it on the same level of priority as other aspects of training such as preparing accounts for IPOs or adjusting management incentives for public markets.
In France, one of Euronext’s main markets, it has also partnered with the Institut de la Finance Durable to publish an ESG pre-IPO guide, offering best practices for ESG during the IPO process.
Euronext has also launched a biodiversity “enabler” index. Constructed in partnership with Iceberg Data Lab, the index excludes firms with a negative impact on biodiversity such as those involved in pesticide production or consumption of some types of palm oil. Issuers are then selected based on their positive contributions to biodiversity.
Despite the increasing complexity of ESG indexes, Boujnah denied that index providers are in an arms race [on ESG]. The development of these indexes is instead driven by asset managers who are looking to reflect the preferences of their own investors, and who are looking to diversify their own “menus” of indices.
“We used to have ESG indices, and then we had ‘E’ indices and now we have carbon footprint and biodiversity-driven indices. These are becoming more granular as the ESG concept becomes more mature,” he said.
Meanwhile, Euronext also announced the launch of a Euronext Foundation. The foundation will look to support local communities with financial literacy, improve DE&I in the financial industry and support ocean protection, such as by supporting a programme in Norway to remove fishing waste from the ocean.