Announcements made at COP27 this year are further evidence of the importance of data in solving the climate crisis. Taxonomy initiatives, corporate disclosure, international standardisation and greenwashing were all on the agenda at the conference in Sharm el-Sheikh.
The Climate Data Steering Committee, launched in June 2022 by French President Emmanuel Macron and United Nations Special Envoy for Climate Ambition and Solutions Michael Bloomberg, outlined the next steps for its Net-Zero Data Public Utility at COP27. This will be the first public platform to provide openly available transition data by building on private sector climate commitments. It aims to close data gaps in moving towards a net zero economy.
The Future of Sustainable Data Alliance also launched its flagship review of corporate and sovereign environmental, social and governance ‘data gaps and holes’ at the conference. The report reaffirms the need for easy, open access and availability of primary corporate and sovereign ESG data.
Climate data challenges became the key focus of the roundtable hosted by OMFIF on 17 November. Fabio Natalucci, deputy director of the monetary and capital markets department at the International Monetary Fund, and Patrick Amis, director general of the directorate general specialised institutions at the European Central Bank, discussed the final report of the Network for Greening the Financial System workstream on bridging data gaps.
The report provides four policy recommendations to urgently address climate-related data challenges. First, fostering convergence towards a common and consistent set of global disclosure standards. Second, increasing efforts towards mutually shared and operationalised principles for taxonomies and sustainable finance classifications. Third, developing well-defined and decision-useful metrics and methodological standards. And fourth, enabling better leveraging of available data sources, approaches and tools.
As co-chairs of the workstream, both Natalucci and Amis acknowledged progress in implementing some of these recommendations with the work of the International Sustainability Standards Board and the European Financial Reporting Advisory Group, and their efforts to avoid fragmentation across jurisdictions. Another noticeable development is the launch of supervisory climate risk stress tests by central banks. The European Central Bank published aggregated results of its assessment of banks’ climate-risk preparedness in July 2022.
However, more progress on the convergence and interoperability of taxonomies around the world is needed. Although taxonomies have been developed or are being developed in many jurisdictions, there is an urgent need to agree on fundamental principles, and disclosure standards could facilitate such convergence.
Key challenges still exist in this area, such as the reliability of data, the lack of relevant benchmarks, overreliance on estimations and modelling, limited accessibility of granular data, lack of specific location information, limited forward-looking data for transitional risks and the need to build capacity in understanding science-based metrics. To tackle these challenges, the NGFS novel directory was created as a living tool aimed at fostering better dissemination of climate-related data and bridging gaps.
Amis acknowledged the momentum building around the need to resolve data gaps, observing ‘We are all eager for data.’ He was supported in this by Natalucci who reiterated the continued need for availability, reliability and comparability (across sections and jurisdictions) of data. Technologies – artificial intelligence, machine learning and satellite data – can be part of the solution, and with the increased convergence of reporting requirements, stress-testing tools and standards being developed across various jurisdictions, the availability and accessibility of dense, reliable and comparable data should continue to grow.
Katerina Atkins is Programme Coordinator at OMFIF’s Sustainable Policy Institute.