Sustainable finance professionals agree sector needs standardised data

Asset managers joined governance and data research experts to explore the challenges and opportunities around developing a truly sustainable finance sector in a recent event at Bayes.

Participants from asset management, governance and data research provided their perspectives on how the sector can help meet current and future environmental and social challenges around decarbonisation and the funding of climate-related projects. This is against a background where environmental, social and governance issues (ESG) have risen up the agenda but are now facing a backlash.

Bayes is offering a new MSc in sustainable management and finance from September.

Antonios Panagiotopoulos, Executive Director of ESG & Climate Research at MSCI Inc, said data is the key issue and explained that after starting in the oil and gas sector he has now spent almost a decade working on sustainability. Illustrating the sheer weight of data, Antonios, a 2007 graduate of the MSc in Energy, Trade and Finance at Bayes, said his company publishes around 80 million datapoints on ESG, climate and physical risk each year.

Data continues to be a challenge, he said.

“The actual operational emissions , which companies should know, are only disclosed by less than 50 per cent in a universe of 10, 000 companies so data availability is an issue. The other challenge is that credit rating agencies have always looked backwards and maybe six months one year into the future – with three or four asterisks about what future predictions may mean. The challenge for us is that we need to forecast emissions for 2050.”

Rafael Silvestre, a specialist on financing net-zero transition with the United Nations-backed Principles for Responsible Investment programme (UNPRI), talked about his early career working as an electrical engineer in Brazil which focussed on green energy projects, including hydro, solar and wind power. When he completed his MBA at Bayes in 2021, he recalls, “there was lot of interest in sustainability and decarbonisation across different industries and sectors”.

Since then, he said, there has been both a convergence and increase in regulation and standards – most notably, the EU’s Corporate Sustainability Reporting Directive, which strengthens rules on environmental and social reporting. He also pointed to the creation of the International Sustainability Standards Board. Both have aligned themselves with the existing Task Force on Climate-related  Financial Disclosures framework.

Such initiatives, Rafael said, have improved standardisation but there is still a way to go.

While agreeing that data remains a fundamental challenge for those seeking to finance the transition to sustainable energy, he also highlighted the ongoing issues around investing in emerging markets and developing economies where the pipeline of bankable projects is inadequate.

Preparing leaders to tackle new challenges

Dr Itziar Castello, Director of the School's new MSc in Sustainable Management and Finance, said: “Climate change is the biggest challenge facing business and society today. It was really interesting that one of the things that came out of the panel discussion was the recognition that ‘greenwashing’ can actually harm companies’ reputation.

“Our new course will equip the leaders of tomorrow with the knowledge, skills and confidence to thrive and play their part in a rapidly changing and complex environment.  Achieving a sustainable future needs forward looking, courageous and conscious professionals.

“The programme takes a critical and holistic view on ESG management – with students developing managerial, legal and investment skills so they can learn how to make ethically and financially sound managerial decisions. They will be able to think critically and ask the right questions – all backed up by tapping into one of the world’s great financial capitals here in London, where they can work on real world problems.”