Outlining the Challenge


Thomas Zeeb, the traditional role of stock exchanges is to enable capital raising in primary and price discovery in secondary markets, while fostering transparency and standardization. How can this contribution be leveraged in an ESG context?

Within the realm of their core functions, stock exchanges can contribute significantly to address the challenges the industry is facing as a whole. Today, there is a plethora of ESG ratings and data providers with very different approaches. The results are at best confusing, or in the worst case, misleading – often described as “greenwashing”.

SIX, as one of Europe’s leading FMIs, and its stock exchanges in Switzerland and Spain – both members of the UN Sustainable Stock Exchange Initiative – have an important role to play alongside regulators and other market participants in harmonizing and standardizing ESG ratings and reporting across jurisdictional barriers. 

Ralf Rühling

By creating greater clarity and transparency, we will reduce complexity and make markets more efficient.

Thomas Zeeb, Global Head Exchanges at SIX

By creating greater clarity and transparency, we will reduce complexity and make markets more efficient. And we will enable companies to provide, and investors to derive, more meaningful information regarding ESG aspects, with less effort than is necessary today. 

Accelerating the Change

This harmonization will take time. Do you have concrete examples of what you have already done to accelerate the change?

We offer ESG indices – the first, the SXI Switzerland Sustainability 25 Index® Total Return, launched as early as 2014 in partnership with Sustainalytics – that serve as underlyings for corresponding investment products, as well as flags and filter options to identify those products listed on our exchanges. By giving sustainable bonds or ETFs greater visibility, we enable investors to make informed investment decisions and direct capital flows towards them.

Increasingly, ESG is also understood as an attractive yield factor.

Recently, we have observed a paradigm shift among investors’ perception. For many years, ESG was seen primarily as an additional way of mitigating risk; increasingly, ESG is not only becoming an almost imperative risk mitigation factor, but is also understood as an attractive yield factor. Promoting financial literacy – something SIX is committed to – is another aspect that can help to direct capital towards sustainable investments.

How are you supporting your issuers in the context of this growing investor demand?

With regards to listed companies, we see our role as a stock exchange to offer them guidance to fulfil ESG regulations that are constantly evolving, which presents a major challenge. We don’t make the rules – but we are proactively guiding our issuers to help them be compliant more easily. For example, we provide a growing range of ESG training courses and workshops as well as ESG guidance in our Investor Relations Handbook. That includes how companies can best serve the information needs of both institutional and private investors, how to approach disclosure requirements across different jurisdictions, how to get started on disclosing sustainability factors, and many other topics.

Issuers on SIX Swiss Exchange can also voluntarily opt in to provide a sustainability report in accordance with an internationally recognized standard, which we then make available to the market on our website. Only when those two things come together, companies being compliant and exchanges like us providing visibility, does transparency to investors start to become even more meaningful.

Couldn’t you be even more “proactive” and accelerate change by imposing stricter requirements for companies and products listed and traded on your exchanges?

This is an interesting question. We could quite possibly implement onerous access and listing rules on our exchanges. But that misses the point: we all have a responsibility – infrastructures, issuers, investors, regulators, and policy-makers – to work closely together to foster a coherent approach to addressing environmental, social, and governance issues. Without wanting to diminish our role at the heart of the economy – ensuring efficient and reliable capital raising and allocation – we are only one part of this equation and are there to facilitate the dialogue and progress, not close doors to issuers or policy-makers.

We see ourselves as enablers that connect issuers and investors with matching ESG-profiles.

For those same reasons we will also not prefer one asset class over another. We see ourselves as enablers that connect issuers and investors with matching ESG-profiles and allow capital flows to be directed freely towards a more sustainable economy and society. So we have to think holistically to mobilise the entire global investment chain and all its stakeholders.

The Role of Innovation

If we look into the future: what role can innovation play to maximise positive social and environmental impact?

From an exchange perspective, we’ve proven our innovation capability with the launch of SIX Digital Exchange. SDX has been built using distributed ledger technology – and we believe that DLT also has a potentially key role to play in the ESG context, by creating greater transparency and clearer accountability for investors and corporations alike. Once the industry has addressed the broader challenges outlined earlier, DLT has, for example, the potential to support compliance activities such as the verification of companies’ reporting and sustainability assertions. We’re looking forward to exploring this potential together with all stakeholders.

We believe that DLT also has a potentially key role to play in the ESG context.

Another space in which exchanges can play a crucial role are (voluntary) carbon markets. To foster the debate around how organized FMI service providers can contribute to tackling climate change and global warming, SIX Swiss Exchange published a White Paper elaborated with students of the Università della Svizzera Italiana (USI) in Lugano and members of its Center for Climate Finance and Sustainability (CCFS). 

The Future of Carbon Markets

What were the key findings?

Carbon pricing is an important economic tool in the fight against climate change, but existing markets present various challenges, such as high fragmentation and very little standardization. Moreover, most transactions are still over-the-counter trades with poor transparency and liquidity. These are all challenges a regulated exchange is ideally positioned to solve, be it in the traditional or the digital space.

And what are the concrete steps you could take to make carbon markets more efficient?

Innovation is key, in every aspect. New products such as carbon bonds, carbon-backed securities, and carbon-offset based derivative instruments that enable efficient decarbonization need to be developed – and we need to provide the platforms where the forces of supply and demand can operate in a regulated space. With the tokenization possibilities represented by SDX, we could potentially create completely new opportunities for issuers.

Thomas Zeeb, thank you for this interview.