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Inside Nasdaq: Evan Harvey, Global Head of Sustainability .

Inside Nasdaq is an ongoing series of interviews with the women and men leading various business and product groups.

Inside Nasdaq: Evan Harvey, Global Head of Sustainability

Evan HarveyNasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services. How does sustainability fit in?

Sustainability fits into our business in a surprising number of ways. First and foremost, as a modern market operator, comparable and transparent data is essential. Buyers and sellers should be able to connect and make transactions on a level playing field. When you look at the hallmarks of the Nasdaq brand since its founding almost 50 years ago, theses virtues still ring true: data efficiency, effective insight, market access, smarter strategies.

Sustainability is a smarter strategy. Companies that harness it successfully enjoy a range of internal and external benefits, as we outline in our recently published ESG Reporting Guideempty. Investors find meaningful insight into company performance by looking closely at how sustainability is managed. Nasdaq offers products and services that focus on aspects of this idea—our Board and Leadership Solutions: Meet X/Director’s Desk, our GRC Solution: Nasdaq BWise, even our Green Index Family.

This is also, increasingly, the way of the future. Young entrepreneurs tend to focus more on sustainable management principles as they build their businesses and attract talent, and thus are better equipped to deal with the heightened scrutiny of a public market. Younger workers actively seek out more sustainable, more socially responsible companies, and they stay at those companies longer. Boards are changing, too—not just diversifying, but also expanding their oversight to cover topics like sustainability.

Describe your role at Nasdaq – and how you got involved in the sustainability field?

I head up global sustainability for the exchange—meaning, I try to weave a lot of different threads together into an efficient fabric. We engage with listed companies to improve their understanding of sustainability and increase their expertise and capacity. We do this though events, webinars, original content and research, and private meetings. We also provide a conduit for listen companies to engage with sustainability frameworks, investors, nonprofits, NGOs, and other stakeholders.

We believe the exchange community has a practical and public role to play in the development of a more sustainable market ecosystem. Nasdaq founded or led the two most comprehensive industry working groups on this issue, one at the UN (the Sustainable Stock Exchanges Initiative) and the other at our trade association (the WFE Sustainability Working Group). We also leverage our media and events platforms, such as Nasdaq MarketSite in New York, to create conversation around sustainable topics in business.

A part of this work is also internal, because our employees are extraordinarily engaged on this topic and others. Our donation-matching platform and team volunteering program helps employees express their values at work and broadens our engagement with local communities. We also work very hard to be a sustainable company in other ways—by efficiently and transparently managing our resources, for example—which is perhaps the best way to demonstrate our commitment.

I grew up in the shadow of very notable environmental disasters (Three Mile Island, Love Canal, Bhopal) and remember reading about the Cuyahoga River literally catching on fire—twice!—due to pollution. And as our collective awareness of an existential climate threat grew, so did my ambition to dedicate myself to these issues. I always believed in the capital markets system as a force for global change, for economic and social empowerment. So now I find myself very advantageously positioned to do some good.ESG Report Cover 2017

You have written a guide on ESG reporting for the Nordic and Baltic markets. What would Nasdaq like to achieve with it?

We want to help companies understand the business case behind sustainability reporting. This data may be considered “non-financial” and thus not required by law—a supposition that is changing, by the way—but that doesn’t mean it has no business value. Sustainability data provides startling operational insight, identifies and prioritizes key strategic targets, and opens the door to stable, long-term investment.

The work that Nasdaq undertook in the writing of this guide, however, is designed to bring needed clarity to a crowded and confusing marketplace. In evaluating, recommending, and contextualizing these specific performance indicators, we had five target questions:

  1. Precedent – Which sustainability reporting requirements or practices have already been enacted around the world, and how effective have they been?
  2. Prevalence – Are certain sustainability indicators ubiquitous across multiple reporting frameworks, and why is that so?
  3. Potential – What do investors really think about the correlation of certain metrics to overall company health and longevity? Specifically, which data points demonstrate the likelihood of enhanced returns?
  4. Perspective – Is there consensus among investors large and small, general and specialized, about the current state of reporting, and how exchanges could make it better?
  5. Practicality – What’s a reasonable ask? If we examine available resources at companies of all sizes to track and report on these issues, what might be prohibitive in terms of cost, personnel, time, or expertise?

What are the biggest future opportunities and challenges in making markets more sustainable globally?

The opportunities are certainly more provocative than the challenges. Imagine a capital market where all of these performance factors are reported promptly and accurately. Investors will certainly use the data to better understand companies and create smarter, more long-term investment vehicles. Indexers could mix and match the data in millions of ways to tease out investible themes: supply chain oversight, data center efficiency, renewable energy innovation. And exchanges might finally know where the performance gaps are, and concentrate their outreach and resources on the companies that need it most. Regulatory oversight and risk forecasting would take a massive step forward, leveraging more detailed and sophisticated behavioral models. But most importantly, we could systematically begin to push capital into more sustainable directions.

There are many challenges still to overcome. Can we facilitate more corporate ESG reporting without slowing companies down, inhibiting innovation or job growth? The reporting burden for public companies is already quite high; additional regulatory or practical expectations would have to be efficiently integrated. There are a number of overlapping (and, in some cases, competing) sustainability reporting frameworks available—which ones should companies rely upon? Which ones do investors trust? Our ESG Reporting Guide was intended to eliminate some of this confusion, to help companies sort it out. I also think investors have to become more transparent about their commitment to this topic, too. Paper pledges and annual letters do not really move the needle—or the necessary dollars—to the next level.

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