Stock Exchange green credentials award marks a path to success

Since its launch in October 2019, the London Stock Exchange’s (LSE) Green Economy Mark scheme has proved a success. To qualify for the Green Economy Mark, companies and funds listed on the LSE’s Main Market and Alternative Investment Market (AIM) must derive 50% or more of their annual revenue from products and services which contribute to the global green economy.

When it was launched, the LSE emphasised that the Green Economy Mark looked beyond ‘pure-play’ green technology companies to also include “those of all sizes, across all industries, driving the transition to a sustainable, low carbon economy”. This methodology, it felt, avoided a reductive approach of limiting the award to companies directly involved in environmental activities.

The Green Economy Mark is based on the Green Revenues Data Model developed by the FTSE Russell, the LSE-owned provider of stock market indices and associated data services, and was initially awarded to 74 issuers with a combined market value of £55bn. That number has now extended to over 90 issuers with a total market value in excess of £130bn including more than 25 green funds.

Of the issuers included, the recipients of a Green Economy Mark are evenly split between the LSE Main Market and AIM. The acquisition of the Mark has become valued as a means of providing visibility for investors seeking sustainable credentials before making their choice. A scan of those in possession of the Mark is notable for the wide diversity of industrial sectors represented and an endorsement of the LSE’s intention to look beyond the more obvious sectors.

With companies from sectors such as travel and tourism, conventional energy, gold mining, defence and construction figuring among the recipients, the Green Economy Mark can certainly be said to have achieved that aim. It also provides an invaluable boost to new issuers who can include the Mark at the IPO stage as an enticement to green-focused investors.

As an illustration of the perceived value of the award, Foresight – the independent infrastructure and private equity investment managers – have very recently issued documentation regarding their intention to float on the LSE in February. On page 1 of the document, they state that they expect to qualify for the Green Economy Mark on their admission to the Main Market

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The LSE’s green economy report, published in July, contained many testimonies to the value of the award. Calisen – a Manchester-based company who procure, own, install and manage electricity and gas meters for energy retailers – became the first company to qualify for the Green Economy Mark when they were admitted to the LSE’s Main Market in February. Bert Pijls, CEO of Calisen, said: “Being able to say that we were expecting to receive the Green Economy Mark on admission proved to be very beneficial in our conversations” with potential investors at the IPO stage.

The report also noted that issuers with the Green Economy Mark outperformed the FTSE All-Share index over the past two years by 36% as the accredited companies demonstrated greater resilience and recovered faster than the rest of the market.