How is TMX Group using data and technology to innovate and further support investors, as well as pave the way for a greener future?
I believe the biggest inroads are being made with our Trayport business, based out of London, which provides data, aggregation execution, and algorithmic trading solutions for global energy and environmental markets. Since the Trayport acquisition in 2017, we have been adding new asset classes as we move into the energy transition. We have spot energy trading, algorithmic and charting capabilities, and we have achieved that through various acquisitions and partnerships.
In Q1 2022, we partnered with IncubEx, to launch The Voluntary Climate Marketplace (TVCM), traded electronically on Trayport’s Joule platform. Our goal is to help companies meet their net zero mandates through TVCM, and TMX Group uses the TVCM platform to purchase our own voluntary carbon offsets. To launch the platform, TMX Group entered a voluntary carbon offsets transaction with ClimeCo, where the Climate Action Reserve standard verified offsets purchased from a North American based offset project.
How does the TSX generate revenue through the Joule platform?
Trayport is a technology company at the core, offering software as a service, where we do not profit off people's trading activity, but rather charge a subscription fee for users, traders and or brokers. They then put their products on the platform and then the market to freely trade. Just as you would see with stocks and bonds, this would happen within the energy space. Trayport allows for a new level of transparency in the energy trading space.
Could you highlight some of the strategies you are using within the TSX and TSX-V to incentivise companies to be more sustainable?
Integrating sustainable practices into a company’s operations and having good ESG disclosure is key to attracting global capital as responsible investing continues to grow and integrate into the mainstream.
We are committed to supporting the global transition and we have taken important steps to guide our issuers in navigating this path - these include a collaboration with IHS Markit to create an ESG reporting database, support for ISSB global headquarters in Montreal an ESG 101 portal for issuers, the launch of the Voluntary Climate Marketplace (TVCM) that I mentioned previously, and the launch of the S&P/TSX Battery Metals Index.
In the mining sector, for example, we believe it is important to showcase companies mining for metals and minerals necessary for the renewable economy. Earlier this year, we launched the S&P/TSX Battery Metals Index to measure the performance of both TSX and TSX-V companies focused on the production and exploration of those kinds of materials. This enables an individual who is either a portfolio manager or a trader, who would like to purchase an ETF linked to this index, to purchase or create ETFs that mimic the index. Portfolio managers can ensure they have enough renewable and sustainable mining operators, for example.
The company selection process for both these and other indexes, such as the S&P/ TSX 60 ESG and S&P/TSX Composite Indexes is determined by S&P, which uses data from the Dow Jones ESG Score and other metrics. Companies are rewarded according to their sustainability score.
Which are the greatest challenges currently faced for the green economy transition and how is TMX Group helping navigate them?
Harmonization of standards in the space, which is something that we are advocating for, is pivotal as we move forward. We need to watch out for the rise of greenwashing, and require technological innovation; taxonomies that are standardised, and better data disclosure, amongst many others. The purpose of TMX is to make markets better and empower bold ideas. In that vein, we need to help sustainable growth companies get access to capital, so they can pursue their dreams of cleantech and renewables; whether it be in mining or electrification sectors.
TMX Group has a lot of engagement and education on ESG, at times one on one, to support venture companies in need of assistance. We also have a strong voice to advocate with regulators, politicians, and any kind of authority or body in the space, to advance the wants and needs of our clients. Within Canada, we have a strong focus on the ‘S’ within ESG, which is the reconciliation of indigenous people to foster collaboration. We participate in various different forums in Canada, which are starting to take hold, the most recent being the Progressive Aboriginal Relations (PAR) certification programme (started that in 2021). We are at the very early stages of this journey, but operate at the centre of the Canadian capital markets ecosystem and have an opportunity to play a significant role in both the economic reconciliation and empowerment of indigenous businesses and communities
