Finance markets

ICE coordinates sustainable finance – Markets Media

Earlier this year, Elizabeth King added the newly created position of President of Sustainable Finance at ICE to her role as Chief Regulatory Officer to enable greater collaboration between the climate, data, markets and indices teams.

The new role is part of ICE’s initiative to bring together its sustainable finance products and services to better meet client needs and enable them to achieve their own sustainable finance goals, according to King.

Elizabeth King, ICE

“One of the things we’re doing at ICE is collaborating more effectively across our climate, data, markets and indices teams to inform client decision-making,” she added.

King added that ICE was looking to develop new products and grow sustainable finance offerings with its existing assets. She said, “However, if we see innovative companies that can add to our product offering, we will make acquisitions.”

In December last year, ICE purchased risQ ​​and Level 11 Analytics, enabling ICE to turn physical climate data into actionable insights, starting with municipal bonds and then mortgage-backed securities. In July this year, ICE announced the acquisition of Urgentem, which provides Scope 1, 2 and 3 greenhouse gas emissions data, analytics and tools for more than 30,000 publicly traded securities. stock market and private, enabling ICE to expand its climate risk offering to companies. transition risk.

“Bringing together these assets enables ICE clients to measure the full spectrum of climate risk for businesses, sovereign states and municipalities,” King said.

In July this year, ICE launched ESG Geo-Analyzer, which uses ICE geospatial data modeling to provide physical climate risk measurements on multiple hazards, including wildfires, hurricanes, droughts and flooding, as well as social impact data on community demographics and wealth on a property or group of properties in the United States and their related securities such as US municipal bonds and mortgage-backed securities.

Social impact opportunity data shows the impact of investing in a particular municipal bond versus another, and this is an area where ICE is looking to expand according to King. Additionally, the ICE ESG Geo-Analyzer will expand globally in 2023.

As a result, King asserted that ICE maps fixed income securities in a way that others cannot, particularly with the acquisitions of Level 11 and RiskQ, as they focused on municipal and asset-backed securities. mortgages. ICE has significant mortgage business and interesting data on mortgage-backed securities, so this is an area where the company feels very well positioned to uniquely serve fixed income investors.

“ICE’s unique hierarchical business entity data links equities and fixed income securities to their issuing companies and ultimate parent companies,” she added. “This is very valuable as clients develop both equity and fixed income portfolios that are aligned with their ESG objectives.”

Carbon markets

In addition to fixed income securities, King argued that ICE has a unique position in carbon markets. ICE said it traded a notional value equivalent to $1 trillion in carbon allowances in 2021, more than half of the world’s total estimated annual energy footprint.

“ICE is the leader in environmental markets, where for almost two decades we have offered trading for the European Union Emissions Trading Scheme (ETS), and more recently for the UK ETS,” said said King. “To serve market players’ efforts to meet net zero commitments, ECI markets extend to voluntary climate markets and other carbon credits.”

Ben Jackson, ICE

Benjamin Jackson, president and president of mortgage technology ICE, said on the second quarter earnings call that despite global energy concerns, governments, companies and market participants remain committed to environmental policy aimed at reducing carbon emissions. Therefore, he expects the pricing of pollution, carbon-free electricity, and carbon sequestration and storage to continue to grow in importance.

ICE’s products across the carbon cycle include renewable fuel contracts, carbon allowances, nature-based solutions and renewable energy certificates.

“The scale of our complex, coupled with the growing importance of carbon pricing transparency, has contributed to the average annual growth of 19% in the volume of our environmental complex over the past five years,” he said. he adds.

On October 10, 2022, ICE plans to introduce UK Carbon Allowance Options (UKA Options), subject to regulatory approval following the launch of UK Carbon Allowance Futures United in May 2021.

Gordon Bennett, Managing Director of Utilities Markets at ICE, said in a statement: “The launch of UK Carbon Options follows the successful launch of the UK Carbon Market last year and should provide our clients with a new tool significant to manage the risk related to the price of carbon emissions. .”

On August 17, 2022, ICE launched 10 new Nature-Based Solutions carbon credit futures that allow market participants to buy, sell and hedge carbon credits from 2016 to 2030.

Michael Curran, Head of Environmental Products at Vitol, said in a statement: “Developing a deep and liquid financial market for carbon credits will help us get to net zero. Carbon credits have a key role to play, both in mitigating climate change and in addressing other sustainability issues.

Data and indexes

ICE’s data products have over 550 data attributes which cover E, S and G according to King. The index business also develops climate-aligned indices that clients use as benchmarks to develop their own products.

In June 2022, ICE launched a series of corporate bond climate indices designed to help achieve net zero carbon emissions by 2050. They use 23 of ICE’s corporate bond benchmarks to create a suite of 138 climate indices, many of which are labeled as Paris-aligned benchmarks and Repères Transition Climatique.

Varun Pawar, head of ICE data indices, said in a statement: “The target of reducing carbon emissions has become a key objective for investors, as they begin to examine not only promises of change, but also the actions companies take to achieve their emissions Goals.

ICE’s ESG data covers 10,000 companies globally and there is a lot of interest in ESG in Asia according to King. She said: “Some Asian banks have licenses for our weather-based indices and are building ETFs around those products, so it’s really a global phenomenon.”

NYSE

ICE owns the New York Stock Exchange, which has 2,400 listed companies with their own sustainability goals.

King said: “A differentiator for ICE is that as an exchange we have the largest environmental markets and the NYSE has the largest companies listed with us that are the most advanced in their sustainability initiative, so I think it’s a great resource.”

NYSE and Intrinsic Exchange Group are also pioneers of natural asset companies, a new asset class based on nature and the benefits that nature provides, which King described as a very exciting product that will be supported within the group. wider.

The NYSE Sustainability Advisory Council was launched in March this year and consists of 21 sustainability leaders at the largest publicly traded companies across all industries. The group will share information so they can learn from each other and also see if they can provide best practices and guidance to the wider NYSE-listed business community.

In his new role, King is also working to expand the NYSE Board’s advisory council with co-chairs Sharon Bowen and Duriya Farooqui. The board is made up of 20 CEOs from listed companies and was launched in 2019 to bring more diversity to boards.

The council’s chief executives recommend candidates to the board from its database of nearly 300 diverse candidates.

“There has been an increase in requests from companies for board candidates from our database and we are working to make more companies aware of this resource as they search for potential candidates with demographics. various to freshen up their boards,” King said. “About 30 to 40 Board Advisory Council nominees have been placed on boards.”