Nasdaq ESG business growing despite SEC lobbying 

August 26, 2022

Nasdaq CEO Adena Friedman has revealed its ESG unit is the fastest growing part of the business, despite the stock exchange’s lobbying efforts against pro-ESG laws from the SEC. 

In an earnings call reflecting upon the first six months of 2022, Friedman told the media: “[ESG] is definitely the highest-growth part of the business. This is going to be the long-term growth driver for us.” 

Read Minerva's previous coverage of Nasdaq:

https://www.old.manifest.co.uk/nasdaqs-diversity-disclosure-rules-approved-by-sec/

Nasdaq’s ESG unit advises companies on their ESG policies while helping them meet disclosure requirements.  

Concurrently, Nasdaq is lobbying the SEC as it attempts to introduce further climate disclosure regulations for companies in a bid to eradicate greenwashing. 

If successful, this proposal would force companies to reveal direct greenhouse gas emissions and that these would need to be verified by a third party.  

The stock exchange has been a vocal opponent to these rules, instead asking the regulator to postpone and dilute these. 

Arguing the proposal could “deter many companies from going public”, Nasdaq has promoted a ‘comply or explain’ system as preferential.  

Though more ESG disclosure requirements could benefit Nasdaq’s ESG business, this is still the minority revenue stream for the wider organisation. 

In its earnings, for the first six months of 2022, its investor relations and ESG business generated $122m or revenue, up from $112m the previous year. 

Over the same period in 2022, revenue from Nasdaq’s listings business was $214m.  

Despite this lobbying, Nasdaq has introduced its own disclosure rules for companies. 

Now in effect are rules requiring entities listed on Nasdaq to publicly disclose diversity statistics for their boards of directors.  

This follows a ‘comply or explain’ model with companies forced to explain why they are falling short of diversity requirements. 

These include a requirement for at least one director self-identifying as female and one director self-identifying as an underrepresented minority or as LGBTQ+.