Sustainable listings and good governance

Tuesday, 19 Nov 2019

A stock exchange listing is a mark of authenticity — itself a sign of good corporate governance, especially in the green and sustainable investment market, writes Fiona Le Poidevin, CEO, The International Stock Exchange Group.

Heading up a stock exchange group, I often come into contact with business owners or their advisers who are considering accessing the capital markets as a route to fundraising, whether simply for working capital or to take their company to the next stage of its development, for example via mergers and acquisitions (M&A) activity.

What I always suggest is that executive and non-executive teams give early consideration to the listing rules, which include adhering to both general principles and specific listing requirements. For example, a company wishing to list equity on The International Stock Exchange (TISE) is required to provide three years of audited annual accounts and, as such, undergoing a proper review and planning process prior to the point of seeking admission to the Exchange not only has strategic but very practical benefits.

A company wishing to list on TISE must appoint a listing sponsor, which is responsible for helping the company with the listing application process. This includes demonstrating that the company meets the minimum conditions of listing, completion of the listing document, disclosure requirements and responsibility statements.

The sponsor is also required to assist the company in meeting its continuing obligations, post admission. This includes notifications to the market and the ongoing preparation of audited financial statements to internationally recognised standards (e.g. International Financial Reporting Standards, or IFRS, the UK’s and the US’s generally accepted accounting principles, or GAAP). The audit provides third-party scrutiny and review of the financial position of the company, which allows investors and the wider public to be able to make an evaluation of the performance of the company.

As such, the listing rules not only demand, but also reinforce, transparency and good corporate governance.

Attracting investors

This makes (both primary and secondary market) investment in listed companies more attractive for investors. Indeed, some investors, such as large institutional investors like pension funds and insurance companies, are mandated to only invest, or invest a certain proportion of assets, in listed companies. This is because they know that the company in which they are investing is adhering to specified standards of transparency and governance.

It means that when I am talking to companies about listing, I can point to the benefit of attracting more and quality capital by virtue of adhering to the standards of transparency and good governance. However, this does not diminish the fact that this is the more ethical way to do business in any case and that, aside from the immediate financial benefits that listing may bring, companies should be aiming for the highest standards of good governance as it, in turn, promotes long-term sustainability.


On the note of sustainability, of course, allied to this is the growing focus on corporate environmental, social and governance (ESG) attitudes, policies and practice.

There is a feeling that corporates have historically only paid lip service in this regard and, as such, now face pressure from two directions: on the one hand, governments, regulators and supra-national bodies are beginning to impose standards on the corporate world; on the other, a new (millennial) generation of investors is providing the catalyst to demands for better regard to ESG factors, which are feeding their way through, often via institutional investors and asset managers, to investee companies. 

"There is a feeling that corporates have historically only paid lip service in this regard and, as such, now face pressure...for better regard to ESG factors."

There are reports that question both which generation has the most appetite for ESG investing and the extent to which it is being followed through in practice. Yet, even if it does remain more aspirational, there is no doubt that the pressures from both governments and regulators (‘above’) and investor groups (‘below’) are building, and the narrative is only heading in one direction.

This means that both investee companies and institutional investors face increased demands (one way or the other) to demonstrate their ESG credentials. As a result, there has been significant growth in ESG-specific training and qualifications, consultancies and technology with a view to providing more detailed reporting. However, especially while this remains in its infancy and relatively immature, standards continue to be varied and, as such, it remains difficult to draw comparisons and conclusions. Nevertheless, there is still demand for more general ‘products’ with labels and badges, which clearly articulate the merits of an investment.

A TISE product

At TISE, we have built on our core listing offering, with the transparency and good corporate governance that entails, to also offer a specific product for green and sustainable investments. We have launched a green market segment, TISE GREEN, to encourage greater flows of capital into investments that protect or enhance the environment.

TISE GREEN has been established to enable those seeking investment into environmentally beneficial initiatives to highlight their green credentials while, at the same time, providing easier access for investors who are looking to allocate towards those investments that have been verified as meeting globally recognised standards in green finance.

TISE GREEN is open to investments – bonds, funds and trading companies – from any jurisdiction. An appropriate third-party needs to provide verification both initially, and ongoing annually, that the investment meets an internationally recognised standard of green finance.


An appropriate third party verifier includes firms that have been specifically endorsed by those who have initiated global standards, audit firms, rating agencies and other niche specialists in assessing environmentally sustainable initiatives. The recognised standards on TISE include the Green Bond Principles published by the International Capital Markets Association (ICMA) or the Common Principles for Climate Mitigation Tracking published by the Multilateral Development Bank (MDB) and the International Development Finance Club (IDFC).

Having this third-party verification measured against a recognised global standard at the outset and annually is hugely important in doing as much as possible to protect the integrity of the market and enhance the value of the product. Other exchanges do not necessarily have this stipulation for their green markets but we wanted those on TISE GREEN to be able to showcase that fact, safe in the knowledge of the credibility of the ‘badge’. Indeed, that ‘badge’ is intended to provide potential investors with a shorthand way (compared to detailed, granular ESG reporting) of knowing that they are investing their and/or their clients’ money in a manner which is consistent with globally recognised standards of green and sustainable finance. 

"It [TISE GREEN] builds on the fact that the Exchange provides a mechanism for the flow of capital by specifically providing an offering to facilitate investment into initiatives that will protect or enhance the environment and, as such, help to save the planet."

Any investment must first be admitted to TISE’s Official List but beyond the usual fees for listing, there is no additional charge for the subsequent entry to, and presence on, TISE GREEN. This is not only in recognition of the likely additional expenditure in obtaining third-party verification but also because we don’t want to be accused of profiteering from the demand for green finance. We see TISE GREEN as part of our own corporate social responsibility. It builds on the fact that the Exchange provides a mechanism for the flow of capital by specifically providing an offering to facilitate investment into initiatives that will protect or enhance the environment and, as such, help to save the planet.

To that end, we have been delighted to welcome our first investments onto TISE GREEN. Faro Energy, which specialises in solar energy projects in Latin America and other emerging markets, has had four bonds successfully admitted to TISE’s Official List and subsequently approved to enter TISE GREEN. The bonds are certified green bonds under the Climate Bonds Initiative (CBI) Climate Bond Standard & Certification Scheme, with the proceeds intended to be used to finance solar energy projects in Brazil.

Impact investing

There used to be a time when the conventional wisdom was that if an investor wanted to invest in a way that was positively impactful – for, say, the environment or for society – then they would have to forgo an element of financial return in comparison with a conventional investment approach.

While this may remain open to debate, advocates of impact investing would point to a 2015 study by Morgan Stanley. It evaluated more than 13,000 US-based funds and managed accounts and concluded that ‘investing in sustainability has usually met, and often exceeded, the performance of comparable traditional investments. This is on both an absolute and risk-adjusted basis, across asset classes and over time’.

On the flip side, it also points to the fact that there is nothing wrong with making financial returns from investments which also have a positive impact. Indeed, profit and positive purpose are not mutually exclusive and it is instructive for all companies to consider how, with investor appetite shifting towards a more purpose led approach, they are performing, not just financially but in terms of the way in which they conduct their business and what that says about the culture of the organisation.


Leadership teams need to be aware that investors are increasingly demanding that companies not only perform well financially but that they are conducting their business affairs in a more broadly positive manner. However, they also need to recognise that they can’t simply apply the thin veneer that in the past used to pass as corporate lip service to those ideals.

Today, investors demand more authenticity and in any case, leadership teams need to recognise that they need to conduct themselves in this way because it is the right thing to do in and of itself. The standards of transparency and good corporate governance demanded, and reinforced, by a listing can assist in this process. This is especially the case when the exchange listing is accompanied by a position on a specific segment which has further in-built standards of transparency and governance that enable companies to demonstrate the credibility of their green, sustainable or impactful credentials to investors.

What strikes a chord with me at the moment is that this is reportedly seen as a ‘new’ approach to doing business. In fact, green and sustainable finance has at its heart the principles of accountability, responsibility and transparency which have long been, and continue to be, central to the concept of a publicly quoted company, listed and traded on the capital market.

This article was published within the Ethical Boardroom publication.

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Fiona Le Poidevin
Fiona Le Poidevin
CEO & Director, TISEG
Mark Oliphant
Mark Oliphant
Head of Communications