Sustainability is often tied to investment but increasingly market participants across the financial services spectrum are looking more closely at the nuts and bolts of the infrastructure, according to panellists at this week’s TradeTech, looking at how sustainable trading is becoming a hot topic.
This is evident by the three new members that announced they were joining Sustainable Trading – Tradeweb, Imperative Execution and Kepler Cheuvreux, taking the total number to 56.
Launched in February 2022, Sustainable Trading, founded by Duncan Higgins, is a non-profit membership network, which aims to transform environmental, social and governance (ESG) practices within the financial markets trading industry.
The network brings firms together to devise practical solutions to industry-specific ESG issues as well as providing a mechanism for self-assessment and benchmarking. The goal is to define a portfolio of best practices tailored to the trading industry.
Christoph Hock, head of multi asset trading at Union Investment, notes that until recently, many of the initiatives, regulation and collaborative efforts have been focused on the products within the fund management industry.
“Trading was left aside and missing from these conversations,” he says. “We are now looking at it in a dedicated way and looking at sustainability of our brokers in our review. We also think it is important to put an ESG layer on top of our regulatory and fiduciary duty to deliver best execution for our clients. This helps create an awareness of the topics. We are at the beginning of the journey but are making progress.”
“Firms should also be focusing more on reducing the impact and carbon footprint of the trading infrastructure,” according to Eleni Coldrey, business director EMEA at digital infrastructure firm Equinix. “Take data centres across the world at exchanges or sell- and buyside firms,” she adds, “they run hot 24 hours a day but there is an option to run them in a low power state versus fully on when the markets close for the day.”
Amy Smith, sustainable finance manager, capital markets at the London Stock Exchange, also believes it is supporting publicly listed companies as well as those who are looking to join the market with their move to a carbon neutral world.
To that end, the LSE has launched the climate transition offering which provides a framework and a series of best practices that companies can follow.
“It helps companies understand where they are and what they should be doing,” she says. “Investors are focusing much more on building climate resilient portfolios and choosing to allocate capital to companies with clear frameworks for managing climate-related risk and opportunities.”
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