Green Economy Mark/Label
| Source: | London Stock Exchange |
| Domain: | Finance/Fundraising |
| Prerequisites: |
Adherence to Green Bond Principles |
| Potential Impact: | Limited |
| Application to Armenia |
Armenian market of securities is well regulated and established. However, activities of the companies on the market are practically non-existent and primarily limited to the mandatory listing in the cases stipulated by law. The cases when company attracts funds through the Security Exchange are also extremely limited. Introduction of the best practice could provide with impetus for private companies to be more active on the market and, in the long term, can contribute towards advancement of the whole system. |
The Green Economy Mark provides a solution to the challenge of identifying an investible universe of green economy equities that can give investors broad, cross sector and international exposure, rather than a narrower focus on, for example, renewable energy infrastructure or pure-play clean technology companies. It helps to raise the profile of less obvious environmental solutions that may otherwise be missed by green or climate aware investors. Through its consistent application across London’s Markets and Segments, the Green Economy Mark and Green Revenue tracking improves visibility to investors and other stakeholders that are interested in green economy activities, whilst maintaining clarity for those whom market or other attributes are investment mandate requirements.
The underlying methodology is the Green Revenue taxonomy developed by FTSE Russell. This was derived in part from the FTSE Environmental Markets Classification System, originally co-created with Impax Asset Management. This identifies activities within industrial sectors and sub-sectors that are contributors to a greener, more sustainable economy. It is intentionally broad but also granular, capturing any level of revenues from commercial products and services that address environmental challenges such as climate change mitigation and adaptation, water, resource use, pollution and sustainable agriculture.
The London Stock Exchange Green Economy Mark identifies London-listed companies and funds that generate between 50% and 100% of their total annual revenues from products and services that contribute to the global green economy as defined by the above methodology.
The 50%+ threshold for the Mark ensures that a majority of the issuer’s activities and a material revenue contribution stems from the green economy. This broader focus, moving beyond ‘pure-play’ green or clean technology companies, recognises that a growing number of companies and funds of all sizes, across all industries, are driving the transition to a sustainable economy – yet also ensures that green economy activities represent a core part of the issuer’s business to avoid over-dilution.