Initiative aims to improve quality of sustainability data for investors and governments.
The Future of Sustainable Data Alliance (FoSDA) has launched its initial recommendations to foster best data practices in order to enable the smooth transition to a low-carbon economy.
Institutional investors across the world have cited lack of data as a hindrance to making sustainable investment decisions. According to FoSDA, the new recommendations will help plug ESG data gaps and map data to sustainability taxonomies and policies.
FoSDA was launched at the World Economic Forum (WEF) in January 2020 with the aim of supporting the data requirements of investors and governments to meet 2030 climate targets.
Founding partners include the WEF, United Nations, the Institute of International Finance, Official Monetary and Financial Institutions Forum, the Global Financial Markets Association, the Climate Bonds Initiative and financial market data provider Refinitiv.
FoSDA laid out seven key recommendations for regulators, governments and the financial industry with a vision to improve the quality of sustainability data.
“At FoSDA, we can focus on the data elements of sustainable finance to map data holes. Take biodiversity – only 13% of companies that provide ESG data provide quantifiable data on biodiversity, yet this is where the world’s financial community wants to measure impact. We need to work with regulators and industry to fill this data hole in order for us all to build back better,” said Sherry Madera, Chair of FoSDA, and Chief Industry and Government Affairs Officer at Refinitiv.
The alliance said it had already identified areas of improvement in the way data is used, the granularity of data collected, and the types of data included in financial analysis. Its recommendations suggest moving away from singular datasets where combining datasets yield richer understanding of ESG impacts. Specifically identified is the recommendation to unlock the potential of geospatial data to identify risks and analyse biodiversity impacts.
Other recommendations include an increasing focus on forward-looking datasets when assessing ESG risks, and standardising corporate ESG reporting to make it internationally consistent.
“Since the launch during the Annual Meeting of the World Economic Forum this year, the FoSDA partners have been using their collective expertise and experience to deliver ESG data recommendations for the financial community. By engaging with regulators and industry we can together address the key challenges in the ESG dataspace and facilitate sustainable investing,” said Matthew Blake, Head of Financial and Monetary System at WEF.
FoSDA will now prepare a report based on the recommendations to develop a detailed overview of the steps needed to address challenges in the ESG data space.