This year’s World Economic Forum’s (WEF) conference in Davos has placed a huge emphasis on achieving the sustainable development goals (SDGs) and solving the climate crisis. One stakeholder in particular is being viewed as both the criminal and the solution for this problem. The finance industry. Executive director of Greenpeace reported that the finance industry are as culpable as the fossil industry in creating climate emergency. Greta Thunberg even went as far as demanding the financial sector to
“immediately halt all investments in fossil fuel exploration and extraction. Immediately end all fossil fuel subsidies. And immediately and completely divest from fossil fuels” (source).
Despite the negative spotlight, these financial institutions were also viewed as the force for change. From preparing transitional frameworks to move away from the current broken economic system to investing more money in Green Finance and Green Bonds. However, there is just one problem. There is a distinct lack of data and standardized reporting standards for sustainability. Without this, the capital market is unable to fully comprehend sustainable development. Therefore, they are unable to successfully invest in environmental and social projects.
It is then no surprise that data is the new oil. Data can help the finance industry assess risks in sustainability and understand where the critical climate challenges are. Data collection also means that governments can ensure environmental regulations are implemented by polluting industries. For example, data that is collected from these industries can be used to monitor their polluting activities.
As a key first step, Refinitiv has announced the launch of the Future of Sustainable Data Alliance in Davos yesterday. An alliance to accelerate capital into sustainable financing using data. The Alliance aims to solve the question
“What data do investors and governments need to meet the requirements of both regulators and customers for sustainable investments and products in pursuit of the 2030 Agenda”.
While this is a great start, it needs to be stressed that the data needed to quantify, measure and compare impact is still in its early stages. From my point of view, there are two momentous challenges that will need to be addressed to move forward. First, data reporting will need to be standardized. Whether that is one format for each industry type or one universally accepted format for all industries. Without a standardized reporting template, we will not be able to compare performance and identify best practices among industries. Second, companies will need to adopt transparency reporting. Only then can we hold these companies accountable, manage risks and most importantly, build trust.
Swiss Learning Exchange is in Davos this week with our mic and camera. Let us know on Facebook, Twitter and LinkedIn, “what do you want us to ask the people on the streets of Davos?”. As for all the latest blogs on Davos 2020, you can visit our online platform SDG Plus.