Bermuda has a long track record of environmental conservation dating back to 1620 when a law was enacted to ban the “killinge of over younge Tortyses” after the population of local turtles were nearly wiped out by overfishing. And during the last 400 years Bermuda, and the businesses that operate on the island, have embraced many aspects of Environmental, Social and Governance (ESG) practices.
The Bermuda Stock Exchange (BSX), a member of the World Federation of Exchanges (WFE), recently launched an ESG initiative that promotes the development of a sustainable approach to the financial system to benefit current and future generations.
The BSX has embraced and is working to implement the WFE’s five sustainability principles: to educate participants in the exchange ecosystem about the importance of sustainability issues; promote the enhanced availability of investor-relevant, decision-useful ESG information; actively engage with stakeholders to advance the sustainable finance agenda; provide markets and products that support the scaling-up of sustainable finance and reorientation of financial flows; and establish effective internal governance and operational processes and policies to support their sustainability efforts. Bermuda is the leading jurisdiction for Insurance Linked Securities (ILS) which have been acknowledged as sustainable development investments. Of the 1012 securities listed on the BSX, ILS comprises 381 listed issuers with $34.5bn in market capital outstanding. As investors look to grow their holdings in asset classes linked to social and responsible investments, this creates an increased pool of investors in these securities which are helping to narrow the protection gap which are uninsured and underinsured risks.
Pension fund investors from several jurisdictions have highlighted the social and environmental aspect of ILS and catastrophe bonds as they provide financing and liquidity when natural disasters strike. ILS are also recognised as being sustainable development investments, according to the UN’s Sustainable Development Goals, as they help build resilience to disasters and climate change. As the world leader in ILS, Bermuda will play an increasingly important role in assisting communities around the world to adapt to and recover from natural disasters, a changing climate, and the resulting impact on vulnerable communities. Many of the BSX’s listings, especially in the ILS sector, are well advanced in developing products that move the sustainable finance agenda forward.
The vast resources of global capital markets are increasingly being directed towards companies whose ESG efforts will make the world a better place for all people – and the BSX is embracing this emerging trend with open arms.