Most environmental metrics start and stop with what the company did last year.
Metrics typically focus on “lagging indicators” – things like current financial expenditures and greenhouse gas emissions. While these give investors some insight about where a company has been, they don’t provide much guidance for the future.
The metrics don't tell you what a company will do next year, or how.
Change starts with a goal and a plan, but most metrics focus on reporting numbers and results. They don’t explain where a company is going, how it plans to get there, or how long it will take. Investors need this information to make sense of the numbers.
There are no consequences for failing.
Did you know climate disclosure metrics are voluntary? If a company doesn’t report, or only reports positive results, or even if it discloses negative results…nothing happens. Existing market mechanisms are not designed to impose any meaningful cost on the company, and therefore there is no incentive or pressure to succeed.
We believe investors should see the process behind the metrics.
It's one thing to know what a company has done. But to predict how a company will respond to climate change and other green challenges, you need to know how a company governs itself and holds itself accountable to its green commitments, at all levels of the company. We are building that commitment into the Green Impact Exchange's listing rules, so investors will have the information they need.
Why a Green Impact Exchange?
We are in a period of unprecedented transfers of wealth across generations – currently, $2 trillion pass each year from Baby Boomers to their children and grandchildren. These younger investors care deeply about the values of the companies they invest in...particularly about sustainability. Unfortunately, the current ecosystem provides no reliable method for investors to ensure the companies they support are actually delivering on their promises – in fact, it encourages "greenwashing" as much as actual progress.
To solve this, we are launching the Green Impact Exchange (GIX) – which will deliver true accountability, enable investors to be confident that companies are delivering on their promises, and, in turn, help these companies to stand out from the crowd and attract outsized dollars from this new investor base.
Why focus on companies? Transitioning to a sustainable future is a global challenge, and other than governments, corporations are one of the most successful human inventions for getting things done at a global scale. We believe that corporations not only can have a huge impact, but are uniquely positioned to make change happen.
And why an exchange? Simply put, exchanges are regulated, and the standards that they hold companies to are inherently enforceable. There are real consequences if a company defaults on its obligations to an exchange – from delisting, to investigation by the SEC, to negative press triggered by a reportable public event. Companies that choose to list on GIX – whether solely or as a secondary listing after NYSE or Nasdaq – are signaling to investors that they are serious about their commitments.
Companies who agree to adopt certain “Green Governance Principles” will be able to list their stock on the GIX. This will give green-minded investors a simple, binary investment screen: either a company has adopted the principles and is listed, or it hasn’t and it’s not. These investors can reward companies that list on the exchange by allocating green investment dollars to them. Investors win because the companies’ commitment is enforceable (through delisting). Companies win because they get attention from green investors who previously might not have given them a second look.
We are a group of ex-executives from the NYSE that have raised capital and are in the process of building out the exchange. If you are a company that is committed to green actions, we'd love to connect with you to share more about our story and hear your thoughts. You can reach us by joining our mailing list or contacting us at firstname.lastname@example.org.