Establish green equity designation for listed companies

Brasil Bolsa Balcao identified a growing demand from investors for credible, comparable information on companies contributing to environmental protection and climate change mitigation. While ESG disclosures were increasing, investors lacked a clear, standardized way to identify listed companies whose core business activities materially support the green economy. At the same time, the risk of greenwashing required robust eligibility criteria and independent verification. To address these challenges, the company sought to create a market-based mechanism that improves transparency, strengthens investor confidence, and incentivizes companies to align revenues and investments with green economic activities.

Location of the initiative: Brazil

In 2024, Brasil Bolsa Balcao launched a Green Shares designation for listed companies. The initiative is aligned with the Green Equities Principles of the World Federation of Exchanges (WFE) and establishes clear eligibility thresholds tied to revenues, investments, and fossil fuel exposure.

Key elements of the solution include:

• Quantitative eligibility criteria linked to green economic activities

• Independent verification by accredited assessment entities

• Annual reassessment to ensure ongoing compliance

• Public designation to enhance investor visibility and comparability

This approach enables investors to easily identify companies with substantial contributions to the green economy while encouraging issuers to shift capital allocation toward low-carbon activities.

Sustainability impact

Climate

The initiative functions as a market enabler rather than a direct emissions reduction measure. By requiring that more than 50% of revenues, investments, and operating expenses come from green economic activities—and limiting fossil fuel revenues to less than 5%—the designation is expected to:

• Redirect capital toward low- and zero-carbon activities

• Increase cost of capital pressure on high-emission business models

• Support long-term emissions reductions across listed companies’ value chains

Over time, wider adoption is expected to contribute to measurable reductions in financed emissions at the market level.

Nature

The designation promotes activities that contribute to environmental protection, including renewable energy, energy efficiency, sustainable resource use, and pollution prevention. By channeling investment toward these activities, the initiative supports reduced ecosystem degradation and improved environmental outcomes.

Social

The initiative strengthens market trust and transparency, supporting fairer investment decisions. It also incentivizes companies to invest in sustainable activities that can generate green jobs and foster long-term economic resilience.

Business impact

Benefits

• Increased transparency and comparability for investors

• Greater visibility for companies with strong environmental performance

• Differentiation criteria within capital markets

• Enhanced credibility through independent, accredited assessments

• Alignment with international exchange-level best practices

These benefits support increased investor interest and reinforce the implementing company’s leadership in sustainable finance.

Costs

Impact on operating costs:

• Internal resources required for framework development and governance

• Ongoing management of accreditation and designation processes

Investment required:

• Moderate upfront investment to design criteria, governance, and assessment processes

Key dependencies:

• Availability and quality of company disclosures

• Capacity of accredited assessment entities

Costs are minimized by leveraging existing WFE principles and using third-party assessments rather than internal audits.

Typical business profile

• Stock exchanges and trading platforms

• Financial market infrastructure institutions

• Markets with growing demand for ESG-aligned investment products

• Jurisdictions seeking to improve sustainable finance credibility

Approach

• Align the framework with international principles for green equities

• Define clear, quantitative eligibility thresholds

• Establish an accreditation process for independent assessment entities

• Develop governance and annual review requirements

• Launch the designation and communicate criteria publicly

• Monitor adoption and update guidelines as market practices evolve

Stakeholders involved

Project leads: Sustainability and market development teams

Company functions:

• Listing services

• Legal and compliance

• Communications and investor relations

Main providers: Accredited independent assessment entities

Other:

• Listed companies

• Institutional and retail investors

Key parameters to consider

• Initiative maturity: Established practice aligned with global exchange principles

• Implementation timeline: Approximately 6–12 months from design to launch

• Assessment frequency: Annual review required

• Technical prerequisites: Reliable financial and revenue segmentation data

• Regulatory context: Must align with local securities regulation

Implementation and operations tips

• Clearly define “green economy activities” to avoid ambiguity

• Ensure independence and credibility of assessment entities

• Communicate eligibility criteria in accessible language

• Use annual reviews to maintain trust and prevent greenwashing

• Engage early with listed companies to support readiness