Investors need trustworthy financial data to make good decisions
Most financial data typically focuses on lagging indicators (i.e. metrics like current operating expenses, employee turnover, capital expenses, net income, sales figures, etc.). While these data points give investors insight about where a company has been, they don’t provide much guidance for where it’s heading in the future. As the saying goes “past performance is not a guarantee of future performance”.
Investors need trustworthy sustainability data to make better decisions
Sustainability data directly (and indirectly) addresses the company's long-term risks and opportunities related to environmental factors. These factors can significantly impact a company's future profitability and reputation. Understanding a company’s sustainable initiatives helps investors understand the company’s commitment to risk management around climate impacts, resource depletion, regulatory changes, and working to avoid reputational harm from accusations of greenwashing. Sustainability data also provides an insight into how the company is addressing market expansion and innovating new products for consumers providing a clue to future growth potential.
Current sustainability reporting isn’t helping investors get the data they want and need
Many companies currently produce sustainability reports where the quality and trustworthiness of the sustainability data is not on the same level as the quality of their financial data in their fiscal reports. Some sustainability reports are only glossy marketing documents designed to make shareholders feel good instead being of data filled documents providing insight and crucial decision-making information to investors and consumers about the future health of the company. Here’s a simple thought experiment – when was the last time you saw a company’s fiscal report that showed sales and earnings were down? By contrast, when was the last time you read a sustainability report that showed the company was producing more emissions and not on track to meet its sustainability goals?
Capital markets can help investors make decisions better and life better for companies
The marketplace is the answer. Stock exchanges can leverage their listing rules and guidelines to promote good governance around sustainability initiatives. Good governance in turn promotes transparency, accountability, measurement, and trustworthy reporting of a company’s sustainability initiatives that are material to its operations. Trustworthy reporting has two major benefits: first, reducing the likelihood of accusations (and occurrence) of greenwashing and greenhushing; and second, getting investors the information they need to better understand which companies are positioning themselves for success and long-term value creation.
Why GIX?
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 GIX to 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 build an exchange? Simply put, exchanges are regulated, and the standards that they hold companies to are inherently enforceable. Investors can trust and rely on the information and reporting companies submit to the exchange, which in turn can help them make good informed investment decisions about the long-term value of the company. 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 voluntarily agree to adopt GIX's listing standards will be able to dual-list their stock on the GIX. This will give 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 investment dollars to them. Investors win because they get accurate and trustworthy data about a company's sustainability initiatives and how their impact the bottom line. Companies win because they get attention from investors looking for the companies that are preparing for future success and are focused on long-term value creation.
If you are a company that is committed to sustainable initiatives to support your long-term business goals, 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 info@tradegix.com
Learn How GIX Can Impact You
GIX was founded by experienced Wall Street executives with decades of experience in capital markets and a shared passion for supporting investor protectionism and helping companies maximizing long-term value creation.
