Gaps in ESG data are among the factors influencing the adoption of sustainable behavior and financing. How will the recently launched Future of Sustainable Data Alliance (FoSDA) help to understand what data investors and governments need to meet the requirements of regulators, citizens and market demand for sustainable investments and portfolios to 2030?
- Reliable ESG data is a critical requirement for effective sustainable investment and for achieving the UN’s 17 Sustainable Development Goals.
- At January’s World Economic Forum in Davos, Refinitiv was one of the founding partners behind the launch of FoSDA.
- FoSDA aims to foster co-operation between regulators and the industry, empowering all organizations to help to understand what data investors and governments need to meet the requirements of regulators, citizens and market demand for sustainable investments and portfolios to 2030.
As the COVID-19 impact is felt around the world, we cannot lose focus on the urgent need to protect our planet and address the many social and environmental challenges faced by all.
What we invest in and how we invest needs to change, and we urgently need to plot the path to get there by understanding the data needs of the future and urgently making progress to make it available.
Significant growth in sustainable investment is evident towards our 2030 goals, but our efforts, nonetheless, remain in the starting blocks.
Despite many governments and regulatory bodies developing policies focused on sustainable investment as part of their strategies to meet the SDGs, no country is as yet on track to meet the 2030 deadline, and the COVID-19 crisis has moved us even more off track.
Therefore, reliable ESG data – which can help guide the allocation of trillions of dollars of investment capital – is now a critical requirement for effective sustainable investment.
Watch: Future of Sustainable Data Alliance: David Marsh
ESG data: evolution in action
The need for standardized, accessible data to guide the financial industry — as well as governments, central banks and regulators — on how best to incorporate ESG risk into decision-making processes has grown in recent years.
There has been much progress in disclosure standards, driven in particular by the Task Force on Climate-Related Financial Disclosures. Despite this, the available data still needs more depth, breadth and connectivity.
Significant work is also needed to address fundamental data requirements in climate risk assessment, water, waste, and biodiversity for environmental risk assessments.
To successfully ensure that the world shifts towards a sustainable future, ESG data — the bedrock of sustainable financial markets — needs to continue its evolution. To become truly valuable, data needs to be complete, coherent, and comparable.
There is an urgent need for the industry to identify gaps in existing data sets, plan for future data needs and pinpoint what it is that the investment community needs in order to make better and more impactful investment decisions at scale.
Future of Sustainable Data Alliance
Against this backdrop, Refinitiv spearheaded the formation of a new multi-member alliance. In January 2020, we launched the Future of Sustainable Data Alliance with the World Economic Forum in Davos.
The other founding partners are the World Economic Forum, United Nations, IIF, ASIFMA, Tsinghua University, OMFIF, GFMA, Climate Bonds Initiative, FinTech4good, Everledger, Oxford University, The Spatial Finance Initiative, Catapult, Finance for Biodiversity, and GoImpact.
This newly formed collaborative body of global influencers will focus on the fact that investors actually need to confidently invest more in sustainable economic activities.It will also aim to accurately inform and increase capital raising and allocation at the scale needed to tackle global societies’ environmental and social challenges.
FoSDA has the following key goals:
- To articulate the future data requirements that investors and governments need to accurately integrate ESG data into decision-making processes.
- To highlight new technology and data sets, in a post-COVID-19 world, there is even more need to channel stimulus that can support a just transition to sustainable development.
- To determine data needs and how to satisfy them for investors who want to take greater account of SDG-related risks and impacts.
The Future of Sustainable Data Alliance will lead the way in delivering decision-ready data to the investment community, and in so doing, empower all stakeholders to make better, more sustainable decisions.
FoSDA members will strive to foster an evolving mindset; co-operate with regulators and the industry; and work to empower all organizations to meet our shared goals of economic stability and inclusive growth.
As we step into a new decade, it is this form of deep collaboration that will ensure that we have the right mix of data, tools and human expertise necessary for all stakeholders to make a positive and informed contribution to the fulfillment of the UN’s SDGs.