Wherethere’sgreen,there’sgrowth

GreenEconomyReport2021

AnLSEGBusiness

Contents

GreenEconomyMark2021:highlights4

Introduction7

COP26:amoment–andmomentum10

LSEG:supportingtheglobalsustainablefinanceecosystem12

Whatisthegreeneconomy?15

GreenEconomyMark:keythemesandtrends18

GreenEconomyMarkcompaniesandfundslist30

Methodology34

Casestudies37

Guestarticle:Leadingthegreenenergyrevolutionwith

55

GreenEconomyMarkcompanyITMPower

Conclusion58

DiCTUPACTUM

MEUM

GreenEconomyReport20213

Foreword

Ascompaniesmakethetransitiontoagreener,net-zerofuture,they

needsupport–fromtheircustomersandemployees,fromgovernment,regulatorsandwiderstakeholders.Equallyimportantly,theyneed

supportfrominvestorsandcapitalmarkets,whichthemselveshavesustainabilityattheircore.A

conveningvenue,stockexchangesplayapivotalroleinmobilising

thissupport.

Asoneoftheworld’slargestcapitalmarketsandsittingattheheart

oftheglobalfinancialsystem,

LondonStockExchangeenableslong-terminvestmentandcapitalraisingtosupporttherapidlygrowinggreeneconomyandthegreeningofthe

overalleconomy.

SincejoiningLondonStockExchangethisyear,Ihavebeendeeplystruck

bythecommitmentacrossthe

organisationtosupportthetransitiontoagreener,moresustainableeconomy–andbythewayLSEG(LondonStock

ExchangeGroup)usesitsconvening

powertobringtogetherinvestors,

issuers,policymakersandregulatorstodriveactiononclimatechange.It

iscrucialthatthecapitalmarketsareorientedtowardslong-termsustainabledevelopment.

ThepaceofchangeandinnovationinsustainablefinanceinLondonhasbeenremarkableoverthelastfewyears.OurSustainableBondMarkethasrecentlyreachedanimportantmilestoneof300activebondslisted,whichhavehelpedcompaniesandinstitutionstoraise

$100bn+insustainablefinancing.

HavingbeenthefirstexchangeintheworldtolaunchadedicatedGreen

BondSegment,in2021webecamethefirstexchangetolaunchaTransitionBondSegment,designedtosupport

companiestoraisedebtfinancetosupporttransitionprojects.

TheGreenEconomyMarkisan

importantexampleofthesupportthatLondonStockExchangeprovidesto

companiesontheirgreenjourney.

Itwaslaunchedtoincreasethe

visibilityoflistedcompaniesandfundsonLondon’smarketsthatarecontributingtoachievingpositiveenvironmentalobjectives,such

asclimatechangemitigationandadaptation,wasteandpollutionprevention,andthetransitiontoacirculareconomy.

I’mdelightedtowelcomethissecondGreenEconomyReport,which

introducesthe101companiesandfundsnowaccreditedwiththeMark.Theyaretangiblyandmeasurablyplayingavitalroleinaccelerating

thetransitiontoalow-carbonornet-zerocarboneconomy,andweshouldapplaud–andcontinuetosupport–theirachievements.

JuliaHoggett

CEOofLondonStockExchangeplc

GreenEconomyReport20214

GreenEconomyMark2021:

highlights

GreenEconomyReport2021GreenEconomyMark2021:highlights5

equityissuers

nowholdthe

GreenEconomyMark

36%

increasesinceitslaunchinOctober2019

￡148.5bn

combinedmarketcapitalisation

Thisrepresentsa120%increasefromthecombinedamountin2020.

corporates

closed-endfunds

listedon

MainMarket

Year-to-date,fiveissuers

qualifiedfortheMark

atIPO:

AMTEPower

AquilaEnergyEfficiencyTrust

ForesightGroupHoldings

musicMagpie

VHGlobalSustainableEnergyOpportunities

quotedonAIM

GreenEconomyReport2021

GreenEconomyMarkissuersaccountfor:

9%

oftotalcapitalraisedin2021year-to-date

27issuerswith

theMarkhave

raisedacombined

￡2.6bn

in2021year-to-date

5%

ofthetotalnumberofequityissuers

+16%

theyear-to-datesharepriceperformance2

Representinga5%outperformance

oftheFTSEAll-ShareIndex.

GreenEconomyMark2021:highlights6

48%

￡8.86bn

raisedbyGreen

EconomyMarkissuers

ofUKissuerswiththeMarkgenerateinternationalrevenues

inthelast24months1tofundfurther

innovations,R&Dandtobuildcapacity

ingrowinggreenmarkets.

3

25%

ofissuerswiththeMarkareinternational

largestsectoronequitymarkets

11April2019to31March2021

2Weightedaverage

3Whengroupedtogetherasasector,byissuance(bothprimaryandfollow-on)since1stJanuary2020

GreenEconomyReport20217

Introduction

Theenormousscaleoftheenvironmental

challengefacingourplanetconfrontsusall.Politically,economically,socially,financiallyandtechnologically,thegloballandscape

istakingonagreenerhue.Thereisadeeperandmoreurgentunderstandingoftherisks

andrepercussionsofclimatechangetoecosystems,societies,marketsand

tocompanies.

GreenEconomyReport2021Introduction8

TheJune2021G7Summitwas

unequivocalincallingforanaccelerationininvestmenttowardsclimatechange

mitigationandadaptation.“Hugeleapsininnovationarerequiredtoreach

ournet-zerogoals,andinfrastructure

investmenttoreduceemissionsand

mitigateclimateimpactsstilllagsfar

behind,”theysaid,citingtheOECD

estimatethat$7trnneedstobeinvestedannuallyuntil20304.

TheG7countriesaremovingtowards

makingclimatedisclosuresmandatoryacrosstheirrespectiveeconomies.Thisyear,G7financeministerscommittedforthefirsttimetoembedclimatechangeandbiodiversitylossconsiderationsintoeconomicandfinancialdecisionmaking.Theydescribeditas“amajorstep

towardsensuringtheglobalfinancial

systemplaysitspartinthetransitiontonet-zero,asinvestorsbetterunderstandhowfirmsaremanagingclimaterisksandcanallocatefinanceaccordingly5.”

Greentaxonomiesarenowbeingput

intoplace,againstwhichinvestors

and,insomecases,companies,mustreport.Importantly,taxonomiesenableinvestorstoidentifyenvironmentallysustainableeconomicactivities6.

CentralbankssuchastheBankof

EnglandandtheEuropeanCentralBankareattemptingtofuture-prooftheir

operationsbyrunningnewstresstestsofthebanks’exposuretotheeffectsofclimatechange7.

GreenEconomyReport2021Introduction9

Investors

Investorsincreasinglyrecognisethe

threatposedbyclimatechange,toboththeglobaleconomyandtotheirabilitytomeettheneedsoftheirclientsover

thecomingdecades.Buttheyalsosee

theenormousopportunityforeconomicgrowthandinvestmentreturnspresentedbythetransitiontonet-zero,andare

actingaccordingly.

The87globalassetmanagerswho

aresignatoriestothe

NetZeroAsset

ManagersInitiative

andarecommittedtonet-zeroemissionsby2050orsooner,areresponsiblefor$37trn-worthofassetsundermanagement.

Thenumberofsignatoriestothe

UnitedNations-supportedPrinciplesforResponsibleInvestment(UNPRI)climbed29%inthespaceofayear,risingtomorethan3,000,withcollectiveassetsundermanagementamountingto$103trn,

accordingtoPRI’s2020AnnualReport8.

Investorsplantodoubletheirallocationstosustainableproductsoverthenextfiveyears,accordingtoBlackRock’sGlobal

ClientSustainableInvestingSurvey.

OneinfivesaidthatCOVID-19would

acceleratetheirsustainableinvesting

allocationsandnearly9in10(88%)haveplacedclimate-relatedrisksatthetop

oftheirportfolioconcerns9.Withthis

sharpeningfocusonclimate,investors

areaskingevermoresearchingquestionsaboutcompanies’greencredentialsandclimatetransitionstrategiesbeforetheymaketheirinvestmentdecisions.

ESGfundflows

Thedisruptioncausedbythepandemichasledindividualandinstitutional

investorsaliketolookformore

sustainableandresilientbusiness

operations,practicesandproducts,aswellastoolstofuture-proofportfoliosagainstclimaterisk.Thishasledto

acceleratingdemandforenvironmental,socialandgovernance(ESG)funds–

ademandthathasalsobeendrivenbytheperformanceofthesefunds,whichhaveoutperformedtheirnon-ESGpeersinsevenoutofthelasttenyears10.

Sustainablefundsattractedall-time

highinflowsof€120bninthefirstquarterof2021,representingmorethanhalfofoverallEuropeanfundflows.Sustainablefundassetsreachedarecordhighof

€1.3trn11.

Thistrendisalsoreflectedintherapidgrowthofexchange-tradedfunds(ETFs),whichhaveaccountedforone-thirdofnewETFlistingsinLondonin2021to

date.TradinginESGETFshasrisenfromminimallevelsin2019andcurrently

accountfor4.8%ofalltradingon

London’smarkets,andtheyaresettobeoneoftheLondonmarket’sfastestgrowingfinancialinstruments12.

4

/wp-content/uploads/2021/06/G7-Economic-Resilience-

Panel-Key-Policy-Recommendations.pdf

5

/g7-finance-ministers-agree-historic-global-tax-agreement/

6

EUtaxonomyforsustainableactivities|EuropeanCommission(europa.eu)

7

/content/f229c6fa-2a9c-4156-a52b-59a709d4ef21

8

/annual-report-2020/foreword

9

/corporate/newsroom/press-releases/article/corporate-

one/press-releases/blackrock-survey-shows-acceleration-of-sustainable-investing

10RefinitivLipperdata,citedbyReuters

/business/

sustainable-business/sustainable-fund-inflows-hit-record-high-q1-

morningstar-2021-04-30/

11

https://www.morningstar.co.uk/uk/news/211923/sustainable-fund-flows-hit-new-

record.aspx

12

/discover/news-and-insights/global-

exposure-best-execution-why-london-centre-global-securities-trading

GreenEconomyReport202110

COP26:amoment

–andmomentum

GreenEconomyReport2021

COP26:amoment–andmomentum11

Theglobalfocusonthethreatofclimaterisktoecosystems,societies,markets

andtocompanieswillbeatitssharpestatCOP26,whichissettotakeplaceinGlasgowinNovember2021.Itisthe

mostsignificantclimatesummitsincethe2015ParisAgreement.

ItisanimportantmomentandoneinwhichLSEG,asanorganisationthatiscommittedtoplayingaleadingroleinsupportingthegrowingdrivetoanet-zerocarboneconomy,willparticipate.

Butbeyondthemomentisthemomentum,asinvestorsandissuerscommitto

acceleratingthereductionoftheircarbonemissionsintheirownoperationsorintheirportfolios.Here,LSEGwillhelptoenablethetransitiontonet-zerobybringingtogethertheexpertiseandmarketparticipantsarounddataanddisclosure,growingthegreeneconomy,enablingeconomy-widetransition,andconveningthemarkets.

GreenEconomyReport202112

LSEG:supportingtheglobal

sustainable

financeecosystem

GreenEconomyReport2021LSEG:supportingtheglobalsustainablefinanceecosystem13

Weuseourdata,forward-thinkingtechnologies

andexpertisetofacilitateengagementbetween

issuersandinvestors,andtohelpourcustomers

tomakesustainable

investmentandbusinessdecisions.

TherearethreekeyareasinwhichLSEGisdrivingaction.

Growingthegreeneconomy

TheGreenEconomyMark,byrecognisingLondon-listedcompanieswith50%ormoreoftheirrevenuesderivedfromproductsandservicesthatcontributetotheglobalgreeneconomy,playsacentralroleinenablingthe

growthanddevelopmentofgreenindustriesandinvestment.

DrivingESGdataanddisclosure

Withdataanddisclosure,weareencouragingissuerstoproduceconsistent,comparableandreliableglobal

climatedata.LSEGco-chairedthe

UNSustainableStockExchange’sadvisorygroupdevelopingModelClimate

DisclosureGuidance

,whichlaunchedinJune2021.Itsaimistohelpexchangessupportissuersinpublishingdecision-usefulclimatedisclosuresandcreateclimate-resilientmarkets.Theworkinggroupwasformed

followinga

callforaglobalcoalitionofstockexchangesfromDavidSchwimmerandMarkCarney

.

WeofferoneoftherichestESGdatabasesintheindustryandhavebeendelivering

ESGdataandsolutions

forover15yearsthroughourheritageRefinitivbusiness.Thisnowincludes

LipperfundandportfolioESGscores

,

sustainablefinancingdeals

,carbonpricingdataandresearchfrom

PointCarbon

,andrenewableenergy

projectsthrough

Infrastructure360

.

Supportingthelow-carbontransition

Wearesupportinginvestmentandcapitalflowstoachievethelow-carbontransitionacrossallsectors.

LSEG’sData&Analyticsdivisionhelpsinvestorscalibratetheirrequirementstoachieveclimateandotherenvironmental,socialandgovernancegoals.TheFTSETPIClimateTransitionIndexwasthefirstglobal

indextoenableinvestorstoalignabroadequityportfoliowithclimatetransitionandthegoalsoftheParisAgreement.London’sworld-firstTransitionBondSegment,anextensionofitsSustainableBondMarket,

enablesissuerstoraisethecapitalneededtotransitiontolow-carbonbusinessmodels.

GreenEconomyReport2021LSEG:supportingtheglobalsustainablefinanceecosystem14

LSEGandnet-zero:leadingbyWenotonlyencourage

underpinnedbyscience-basedtargets,TaskForceforClimate-

ilissuerstoreportagainst

aligningwiththeParisAgreementrelatedFinancial

exchangegrouptocommittonet-zerothroughourreporting

throughtheBusinessAmbitionfor1.5°Cguidance,butaimto

it-issions.Disclosures(TCFD)

andaremembersoftheUnitedNationsembedthesestandards

ClimateChange‘RacetoZero’.

intoourownfinancial

reporting-LSEGhasbeenasupporteroftheTCFDsinceitslaunchin2017.

GreenEconomyReport202115

Whatisthegreeneconomy?

GreenEconomyReport2021Whatisthegreeneconomy?16

Thegreeningoftheglobaleconomy

presentssignificantgrowthopportunitiesforcompaniesandinvestors.However,

tomobiliseinvestmentatscale,green

businessactivitiesmustbeidentified,

categorisedandmeasuredinasystematicway,acrossdiversesupplychainsand

assetclasses.

Amidgrowingconcernsinthefinancialindustryover‘greenwashing’,itis

integralthatwesetthebarhigh,and

havearobustframeworktodetermine

greenproductsandservicesthatare

recognisedthroughtheGreenEconomyMarkaccreditation.Itisalsoimportanttodistinguishbetweenbusinesseswithgoodsustainabilitypractices,social

impactandgovernance,andthose

businessesthatarecontributingto

thelow-carbontransitionbymeeting

environmentalobjectives.TheMark

focusesspecificallyontheenvironmentalelementofESG.Ituses

FTSERussell’s

GreenRevenues2.0DataModel

to

identifycompaniesprovidinggreen

productsandservices,andclassifies

revenuesbasedontheGreenRevenues

ClassificationSystem

(seemethodology).

Globallythereisapushbyregulators,policymakersandstandard-setterstoensurethatinvestorscandetermine

andidentifyinvestmentsthatare

genuinelysustainable.Policymakers

arekeenthatcapitalisdirectedtowardsfundsandcompaniesthatarereducingcarbonemissionsinlinewiththe

ParisAgreement.

GreenEconomyReport2021Whatisthegreeneconomy?17

TheEUTaxonomyforSustainableActivitiesisthemostnotableinitiativetodate,

towhichtheGreenEconomyMarkmethodologyisaligned.InMarch2021,theEU

introducedtheSustainableFinanceDisclosureRegulations(SFDR),requiringinvestmentproductstobecategorisedasdarkgreen,lightgreenornon-sustainable,designedto

preventgreenwashing13.

IntheUK,theGovernmenthasappointedaGreenTechnicalAdvisoryGroup,inwhichLSEGtakesaleadershippositionasamember,alongsideotherleadingexpertsingreenfinance.ThepurposeofthegroupistoprovideindependentadviceondevelopingandimplementingaGreenTaxonomy.

“Byclearlydefiningwhicheconomic

activitiescountasenvironmentally

sustainable,theUKGreenTaxonomy

willclampdownongreenwashing–

unsubstantiatedorexaggeratedclaimsthataninvestmentisenvironmentallyfriendly–andmakeiteasierto

understandhowafirmisimpactingtheenvironment.”14

13

/content/74888921-368d-42e1-91cd-c3c8ce64a05e

14

.uk/government/publications/independent-expert-group-

appointed-to-advise-government-on-standards-for-green-investment

GreenEconomyReport202118

GreenEconomy

Mark:keythemesandtrends

GreenEconomyReport2021GreenEconomyMark:keythemesandtrends19

Withathresholdof50%ormoregreen

revenues,itisasignificantachievementtobeincludedintheGreenEconomyMarkcohort.Atpresent,just5%ofissuerslistedonLondonStockExchangehavequalifiedfortheGreenEconomyMark,whilean

increasingnumbergeneratesomedegreeofgreenrevenuesandremaincommittedtotransitioningtheirbusinesses.This

year,thereare101issuerswiththeMark–27morethanwhentheclassification

launchedin2019.

Itisagroupofcompaniesandfundswithremarkable

breadth.Bytakingaviewofitsconstituents,itprovides

insightsintothetransitiontoalow-carboneconomyasitishappening,withmaturebusinessesinvestingandadaptingtobuilduptheirmixofgreenrevenuesandyounger

companieschoosingtolistinLondonandgaininginvestorsupportforinnovativenewtechnologies.

GreenEconomyReport2021GreenEconomyMark:keythemesandtrends20

Oneinsixarelessthanfiveyearsold,withaproportionthatarepre-revenuebusinesses.Attheotherendofthescale,17%arematureenterprises,morethan30yearsold,

whichhaveseeminglyadaptedtheirbusinessesforthelow-carboneconomy.

Ascanbeseeninourcasestudies,theirrangeofactivitiesdemonstratesthebreadthofthegreeneconomy.Itisbeingaddressedbycompaniesandinvestmentvehiclesof

allsizes,inallgeographiesandacrossallindustries.These101companiesareinthevanguardofthegreeneconomy–fromthecuttingedgeofhydrogen,grapheneandbatterytechnologiestopromotingthecirculareconomyincardboardboxesand

mobilephones.

0-5YEARS5-10YEARS10-30YEARS30+YEARS

AIM

34

3

6

5

TIME

5117

17

16

11

13

MAINMARKET

17

12

0-5YEARS5-10YEARS10-30YEARS30+YEARS

No.MainMarketcompaniesNo.AIMcompaniesNo.totalcompanies

GreenEconomyReport2021GreenEconomyMark:keythemesandtrends21

Outperformingglobalmarketbenchmarks

Intermsofsharepriceperformance,GreenEconomyMarkissuershavedemonstratedexceptionaloutperformance

ofglobalbenchmarks.Overafive-yearperiod,theaverageincreaseinsharepriceofthecohorthasbeennearly131%,outstrippingindicessuchastheS&P500(109%)andthe

STOXXEurope600(42%).

Sharepriceperformanceover?ve-yearperiod%

140

120

100

80

60

40

20

0

130.90%

20.98%

15.82%

FTSE100

●FTSEAll-Share

●AverageofGreenEconomyMarkcohort

15Weightedaverage

GreenEconomyReport2021GreenEconomyMark:keythemesandtrends22

TheCOVID-19bounceback

WehavealsowitnessedtheGreenEconomyMarkconstituents’resilienceinthefaceoftheCOVID-19pandemic.

Duringthemostvolatilemarketperiodfrom1January

2020to23March2020,whenawarenessofthescaleofthepandemicswepttheworldandtheFTSEAll-Sharefellby

35%andtheS&P500by20%,theaveragesharepriceofthecohortfellbyjust13%.

10

-0

-10

COVID-19Drop(Jan2020-Mar2020)

-20

-30

-40

-13.61%

S&P500

-20.16%

FTSEAll-Share

-35.00%

AverageofGreenEconomyMarkcohort

GreenEconomyReport2021GreenEconomyMark:keythemesandtrends23

Asglobalstockmarketsrecovered,theresurgenceoftheGreenEconomyMarkcohortwasstrongerthanUKand

Europeanbenchmarkindices.Inthe12-monthperiod

between23March2020to23March2021,theSTOXX

40

30

20

Europe600increasedby38.8%andtheFTSEAll-Shareby39.9%–buttheaveragesharepriceoftheGreenEconomyMarkcohortincreasedbymorethan43%.

10

0

50

43.34%

38.76%

39.94%

FTSEAll-Share

STOXXEurope600

AverageofG