While widely recognized as a leading stock exchange, Nasdaq is also a technology-driven company, offering platforms and services that empower global capital markets participants. At this nexus between technology, issuers, and investors, Nasdaq is positioned to observe emerging trends from both sides of the market and provide data, market expertise, and insights to its stakeholders.
As Co-founder and Global Head of Sustainability & Climate Advisory, Steve Vargas leads a global team dedicated to helping public and private companies craft sustainability programs. In our conversion, Nasdaq discusses how his team leverages advancements in technology and AI to support pre-IPO and public companies and help them develop effective sustainability strategies.
How did your career path lead you to Nasdaq and ultimately into your current role leading Nasdaq’s Sustainability & Climate Advisory practice?
I began my academic journey in aviation science, then soon discovered I also had a strong interest in finance, where I ultimately chose to build my career. My early roles were focused on financial market data, working with organizations like Calypso (now Adenza, a Nasdaq company), Bloomberg, and Thomson Reuters.
My personal journey into sustainability was profoundly influenced by the wildfires in California. One particularly striking image of the Bay Bridge shrouded in smoke left a lasting impact on me. Motivated by these events, I returned to Johns Hopkins to earn a Master's in Sustainable Energy and pursued additional coursework focused on scaling carbon markets.
About six years ago, I joined Nasdaq on its Strategic Capital Intelligence team, where I helped companies identify and engage with high-quality, long-term-oriented shareholders. As we began getting a lot of questions from our clients’ investor relations officers (IROs) on ESG, we saw an opportunity to create a standalone advisory practice to help companies develop sustainability and climate strategies geared for a capital markets audience. What was once purely thought to be a nice-to-have, a sustainability strategy is now commonly viewed as a must-have for companies.
‘What was once purely thought to be a nice-to-have, a sustainability strategy is now commonly viewed as a must-have for companies.’
Steve Vargas, Co-founder and Global Head of Sustainability and Climate Advisory, Nasdaq
How does a robust sustainability program help companies engage with public equity investors?
For public companies, having a robust sustainability strategy increases investor optionality widening the range of potential investors. We often get approached by companies saying, “we need some help integrating our sustainability story within our broader investor narrative.” This is where our team steps in – we’ll help companies identify best-in-class peer practices, equip them with data for tailored outreach, and ultimately help them attract long-term capital.
Virtually no investor completely disregards sustainability. Whether it’s corporate governance, board and management composition, or other traditional concepts of shareholder protection and value, investment managers and asset owners are attentive to these factors that may impact the risk-adjusted returns calculus for their investments.
Defining material sustainability business drivers is key. Each client has unique sustainability needs depending on their size, industry, resourcing, ambition, value chain, and products and services. Understanding the material drivers and what the company can justifiably achieve is essential and what investors will ultimately respond to. Investors want to know how sustainability strategy is aligned with overall corporate strategy.
‘Companies need to be able to get to the point and articulate what material sustainability factors are closely tied to value creation for their organizations.’
Steve Vargas, Co-founder and Global Head of Sustainability and Climate Advisory, Nasdaq
Each client has unique sustainability needs depending on their size, industry, resourcing, ambition, value chain, and products and services. Understanding the material drivers and what the company can justifiably achieve is essential and what investors will ultimately respond to.
As sustainability data and regulation continues to evolve, what role can AI play in navigating this landscape?
At Nasdaq, we’ve developed compelling fundamental and sustainability-related data sets that provide insights into investors, their engagement activities, and sustainability priorities. We’re at a really interesting juncture right now, where we can layer AI on top of these unique data sets.
Our Sustainability & Climate Advisory practice collaborated with the our product and AI teams to recently launch Sustainable Lens, which incorporates an AI assistant powered by Large Language Models (LLMs) that helps reduce much of the manual effort traditionally undertaken by sustainability teams. For example, it can conduct sustainability gap assessments against disclosure frameworks, automate benchmarking processes, and generate initial drafts of disclosures while summarizing regulatory requirements on behalf of clients.
When it comes to global regulation, we’re seeing a shift from a voluntary disclosure regime to a regulatory one. This has both competitive and compliance implications – making sure you’re not just falling behind but you’re maintaining that license to operate in markets around the world.
Many companies are exposed globally to these regulatory regimes. The main one that comes to mind is the European Corporate Sustainability Reporting Directive (CSRD) – with companies preparing for reporting requirements in 2025 and 2026. AI and LLMs are a natural solution that can efficiently comb through regulatory documents, extract the key requirements and timelines, and map that to the required data and disclosures needed internally.
Sustainable Lens supports a wide range of corporate functions, including sustainability teams, investor relations, legal, and accounting and reporting. Alongside our Metrio CSRD & sustainability software reporting solution, we’re excited to bring this to market leveraging the power of AI to help sustainability teams (which can be under-resourced) make decisions faster and with confidence.
How do you approach work with very early-stage companies? How do you help prepare private companies for going public?
We often begin our work with companies years before an IPO, not just the weeks or months leading up to it. The key thing for early-stage companies to get right is the foundation. Have they set the right ethos, governance, and vision to responsibly execute as they scale? Resourcing, metrics tracking, and reporting may not yet be in place – and that is okay.
Sustainability is not always a discipline that management teams have necessarily spent time on, particularly start-ups. Once we throw away the sustainability jargon and translate it into actual business language – cost savings, revenue drivers, competitive advantages — companies start to make interesting progress.
In many early and even mid-stage companies, sustainability strategy may not be defined at the outset. We help companies develop sustainability strategies to align management teams and public market expectations. We support companies across a range of sustainability challenges and opportunities like AI, climate, and regulation. Gaining insight into how decisions are made at the asset owner and manager levels is a valuable practice when shaping effective sustainability strategies for early-stage companies.
‘Sustainability is not always a discipline that management teams have necessarily spent time on, particularly start-ups. Once we throw away the sustainability jargon and translate it into actual business language – cost savings, revenue drivers, competitive advantages — companies start to make interesting progress.’
Steve Vargas, Co-founder and Global Head of Sustainability and Climate Advisory, Nasdaq
We like to encourage early-stage companies not just to track peers but to broaden their horizons and think about aspirational peers. Seeing what they’re doing that works can help instill direction and progress – it’s also good competitive intel.
Outside of mandatory disclosures and listing ‘hard requirements’, we are seeing leaders address materiality assessments, ISSB S1 & S2 disclosures, climate and emissions reductions goals, and standalone reporting, which can serve as differentiation as we look toward a more conducive IPO environment.
