ESG report: The role of data in sustainable investment

  • Climate issues highlight technical gaps in the practical usage of non-financial data
  • Granular tracking through technology has improved, but regulators and investors struggle to determine precise attribution e.g. via Scope 3 emissions along global value chains
  • New data demands in the wake of the Covid-19 pandemic; regulatory and industry emphasis has rebalanced away from principally environmental issues to a more holistic focus across the three ESG pillars

The move towards sustainability is accelerating even as the global economy grapples with the consequences of Covid-19, an OMFIF-Refinitiv report shows. Socioeconomic resilience in the face of risks such as the pandemic and climate change is moving to the forefront of agendas across the financial sector. Stakeholders are unanimous in the belief that clear and consistent environmental, social and governance data will be critical to realign the financial markets towards sustainable development and help achieve the sustainable development goals. While there has been significant progress in disclosure of information in relation to environmental and societal impacts over the past decade, this field is still young with unrealised potential.

Sherry Madera, chief industry and government affairs officer at Refinitiv, said: The findings in this report are a milestone in the journey to a global sustainable financial system, and as a global financial data provider, Refinitiv is proud to be a strategic partner to OMFIF. As the world continues to assess the impacts of Covid-19 on global economies, the pressure to prioritise sustainability in financial markets remains paramount.’

‘Investors, regulators and policy-makers need to know what constitutes material information, and to know what data are already available to answer that question as well as what data still need to be collected. They need to know how information is collected and standardised across sectors, asset classes and different geographies,’ said Danae Kyriakopoulou, chief economist and director of research at OMFIF. ‘Once they have the data, they need to know how best to incorporate them into models and scenarios so they can be used to make decisions.’

Developing a reliable and equitable financial market will require regulators, supervisors, standard-setters and investors to answer key questions around materiality, data transparency and technical capacity-building. These actors are expanding their focus to the issue of data gaps. This report’s findings bring together diverse, and at times, contrasting opinions from public and private stakeholders to illustrate the main areas that need to be developed to advance the use of sustainable data in the financial community.

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