The Swiss Stock Exchange has now presented a new initiative toward helping investors find their way to companies showing commitment to aligning their business strategies with the 1.5°C climate target. The new ‘SIX 1.5°C Climate Equity’ flag will identify companies making credible efforts to reduce their greenhouse gas emissions to the benefit of all.
1.5°C Climate Equity Flag Criteria
About the ‘SIX 1.5 °C Climate Equity’ Flag The ‘SIX 1.5 °C Climate Equity’ flag is a recognition given to companies listed on the Swiss stock exchange who pass a comprehensive evaluation that evaluates their level of commitment to sustainability and the fight against climate change. The flag, valid for one year and renewable annually, following new reports and information from the company, is revised each year by a reviewer. Two approved reviewers—S&P and SGS—are currently authorized to evaluate companies for the flag.
The criteria to scan the flag reflect three critical assessments:
Top-Down Assessment: The assessment undergoes all the operations being carried within the company’s value chain. It views whether, in totality, the company’s operations-including future quantified targets for the reduction of emission and its removal-are aligned with the 1.5°C climate goal.
Bottom-Up Assessment: This is an assessment of the credibility of companies’ emissions reduction targets—whether and how a company can meet its targets with realistic plans.
Activity-Level Assessment: Verification that at least 50% of the actual revenues and investments of the company are consistent with the 1.5 degrees scenario secures that about half the company’s activity is aligning with the global task of limiting global warming to 1.5 C degrees.
These sustainability appraisals have been based on well-founded sustainability criteria and scientific baseline assessments, such as the Intergovernmental Panel on Climate Change. The criteria have also been aligned with the methodological approach and the standards widely recognized, fostering the Carbon Disclosure Project’s Assessing Low-Carbon Transition initiative, the Climate Bonds Initiative, the UN Race to Zero Starting Line Criteria, and the World Federation of Exchanges Green Equity Principles 2023.
Ongoing Review of the Framework and Updates
SIX has committed to review the framework of the ‘SIX 1.5°C Climate Equity’ flag at regular intervals and to update the same so that it becomes relevant and still holding subsequent effectiveness under changed and always developing regulatory and environmental circumstances. The whole initiative has been developed by this company in close consultation with a wide array of stakeholders, including listed companies, audit, legal firms, sustainability experts, and industry associations. This is a critical move within the context of the greater sustainability strategy of SIX, targeting transparency in improvement and support to move towards a low-carbon economy.
Implications for Investors and Companies
The ‘SIX 1.5 °C Climate Equity’ anchor flag is another useful tool to investors for assessing risks and opportunities pertaining to climate for a specific investment. Giving visibility to companies with a serious commitment to the 1.5 C˚ target brings much-needed transparency to the uncertainty that shrouds a company’s climate emissions pathway, possibly making investment decisions more logical and directing more capital toward companies showing the way forward in climate action.
The ‘SIX 1.5 °C Climate Equity’ flag is an epitome that adds to the visibility and reputation of companies among investors, stakeholders, and the general public alike. It independently attests that the given company is sustainable and on an edge against others in shade. The flag further encourages companies to adopt and maintain robust climate strategies that contribute to global efforts of addressing climate change.
In a world with increased attention to climate action on the global agenda, the ‘SIX 1.5 °C Climate Equity’ flag is the kind of initiative that is set to increasingly influence investor strategy design and subsequently corporate behavior. SIX is providing a clear marker for what 1.5°C alignment is and this paves the way in the creation of a financial marketplace that is transparent and responsible, whereby sustainability is not a buzzword but started from within every investment decision.
Given the flag is based on its framework, which it continuously updates, it will automatically stay attuned to new scientific and regulatory developments to remain relevant and effective in achieving climate-aware investment. With a growing number of companies working to qualify for that flag, such an initiative could move the dial much further in terms of global climate goals.
Source: SIX