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MPhil in Engineering for Sustainable Development

global challenges, engineering solutions

Studying at Cambridge

 

Morgan Sheil

Stock Exchange Listing Rules for the 21st Century: Climate Change and Modern Sustainability

First founded in the 15th century, stock exchanges have grown and spread globally. Stock exchanges provide a central marketplace to facilitate capital formation and intermediation, the matching of lenders with money to borrowers who require it. Stock exchanges are regulated by listing rules, which vary regionally, nationally and globally by exchange, and which constitute the common set of regulations all public companies on the exchange observe. There are few standardized and widespread listing rules or regulations to balance capital formation with environmental damage and degradation.

This dissertation aims to consider weighing the public benefits of stock exchanges against environmental harms. It reviews how stock exchanges potentially contribute to greater emissions and climate change, and the paradigms that establish the status quo. Additionally, it contemplates the potential leverage points that could shift the paradigm to be more environmentally sound. The methodology involved a literature review of academic writings, practitioner reports, white papers, and regulatory documents as well as a qualitative thematic coding analysis of semi-structured interviews with experts in the field.

This dissertation linked exchanges to public companies that meaningfully contribute to greenhouse gas emissions and climate change. Market failures around environmental, social and governance issues were identified, recognizing the capacity of exchange regulation to influence investor behaviour around information asymmetry, short-termism and misaligned incentives. It identified opportunities around standardizing disclosure and reporting of environmental, social and governance issues, and around operational changes, as leverage points to shift existing paradigms towards sustainability in a future decarbonized economy. Future work in this area will quantitatively analyse different regulatory mechanisms to assess which will be optimal to implement, and to address simplifying overall regulatory burdens that public companies face.