The Nairobi Securities Exchange (NSE) #ticker:NSE plans to introduce an index to measure disclosures and performance on climate change action including carbon gas emissions by listed companies.
NSE CEO Geoffrey Odundo said the Climate Transition Index will allow the firms to attract local and foreign capital based on their policies and processes that reduce emissions blamed for the global raising of temperatures.
The index will include green revenues, fossil fuel reserves, carbon emissions and management quality and carbon performance assessment on the firms.
This comes as investors in financial markets are increasingly seeking information from firms on climate change action to assess their risks and their pricing before investment.
“Our focus involves enabling the transition to a sustainable, low carbon economy. In the long run, the NSE would like to develop a Climate Transition Index that will enable passive funds to capture company alignment with climate transitions,” said Mr Odundo during the bell ringing for gender equality event on Tuesday.
Mr Odundo said the Exchange will be providing issuers and investors with climate-related knowledge and updating governance and risk management mechanisms to support the disclosures.
The NSE has been putting in place a number of initiatives to promote the use of Environmental, Social and Governance (ESG) principles among listed firms.
Last year, NSE joined Sustainable Stock Exchanges (SSE)’s derivatives exchanges network, an UN-backed voluntary commitment to promote sustainable development through the derivatives market.
In November, it issued guidelines that will now require listed firms to publish annual sustainability reports that show investors how they deal with issues such as graft, customers’ data privacy and environmental impact.
The Climate Transition Index comes amid the financial market move to spur increased issuance of green bonds.
Kenya’s first green bond by Acorn Properties issued in 2019 raised Sh4.3 billion against Sh2 billion to build environmentally-friendly student accommodation.Mr Odundo said NSE will use its infrastructure in the Growth Enterprise Market Segment (Gems) and Ibuka program to enhance access to capital for green and sustainable businesses under the SME sector.“These are ambitious targets however we have the opportunity to further enhance our work on green finance and prepare our market for the growing demand for climate-related information in a systemic and globally consistent manner as is being demanded increasingly by investors and the finance sector,” added Odundo. email@example.com