Daniel Labovitz, the former head of regulatory policy at the NYSE, is now leading the Green Impact Exchange (GIX) as its CEO. GIX aims to be the first US stock market dedicated exclusively to the green economy, which is valued at over $50 trillion globally.

If GIX receives approval from the US Securities and Exchange Commission (SEC), it plans to begin trading in 2025. The initiative also has a global scope. Labovitz indicates that while GIX requires companies to be listed on a US exchange to list with GIX, he is in discussions with international counterparts about potential cross-listing opportunities.

In an interview with Global Finance, Labovitz shares insights into GIX’s mission and the interest it has generated:

Global Finance: What interest are you seeing in GIX and why?

Daniel Labovitz: We’ve engaged with numerous public companies, and it’s clear they see the value in sustainability for their business and shareholders. There is a strong demand for transparency and genuine commitment to environmental initiatives. Companies that are perceived as greenwashing may struggle to attract top talent and customers, particularly younger demographics who prioritize corporate values. The challenge for companies is to integrate sustainability into their governance and operations to demonstrate long-term value, which is where GIX can play a role.

Global Finance: What concerns do companies raise?

Labovitz: A common concern is whether focusing on ESG (Environmental, Social, and Governance) could distract from shareholder value creation. We believe that focusing on sustainability actually supports value creation. Companies that ignore the impacts of climate change or fail to capitalize on green economy opportunities may miss out on long-term growth. Adapting to these challenges is crucial, and GIX aims to assist companies in building governance structures that reflect their commitment to sustainability.

Global Finance: Is there evidence that sustainability practices benefit companies?

Labovitz: Yes, there is growing evidence linking sustainability practices with improved stock performance. For instance, a 2022 McKinsey study found that companies leading in green initiatives had significantly higher shareholder returns compared to those lagging. Other studies have shown that sustainability-focused governance can positively impact market value and provide resilience during market disruptions. Such evidence suggests that sustainability can lead to better financial outcomes.

Global Finance: How will GIX ensure companies are accountable?

Labovitz: GIX requires listed companies to implement robust governance frameworks to ensure that their sustainability commitments are substantive and not merely superficial. This approach aims to address the skepticism often associated with corporate sustainability claims.

Global Finance: Has anything like GIX been attempted before?

Labovitz: While the NYSE historically set high standards for corporate governance, sustainability reporting today is at a stage similar to where financial reporting was in the early 20th century—lacking standardization and transparency. Unlike traditional exchanges, GIX focuses specifically on sustainability, filling a gap left by current exchanges like the NYSE and Nasdaq.

Global Finance: How will investors benefit from GIX?

Labovitz: GIX will ensure that investors receive high-quality, timely, and reliable information about companies’ sustainability practices. While the exchange won’t guarantee profitability or make investment decisions, it will provide the transparency needed for informed decision-making. Ultimately, market efficiency depends on the availability of accurate information.

Global Finance: What are your next steps?

Labovitz: Our immediate goal is to secure SEC approval and launch the exchange, which we anticipate will occur in the first half of 2025. Following the launch, we will explore additional opportunities, such as listing green derivatives and innovative equity products. We’ll keep stakeholders updated on our progress.