A group of CEOs, including several from major financial institutions, took an aggressive stance on sustainable finance Wednesday in a new report, pushing European policymakers for a greener economy in line with United Nations goals during the pandemic recovery.
The group of 30 CEOs from various global corporations make up the Global Investors for Sustainable Development Alliance, which was founded in 2019. It is co-chaired by Allianz CEO Oliver Bäte and Johannesburg Stock Exchange CEO Leila Fourie. Its membership includes executives from Banco Santander, Bank of America, Citigroup, PIMCO, and UBS, among others. In total, the group represents approximately $15 trillion in assets across 24 different countries.
In its new paper, “Renewed, Recharged and Refocused,” the GISD calls for global economic policies and financial systems to align with the U.N.’s 2030 Agenda for Sustainable Development, especially in light of the COVID-19 crisis. It was written in response to the European Commission’s Renewed Sustainable Finance Strategy consultation.
The pandemic has spurred the GISD to commit to pushing the business sector to step up efforts in incorporating the U.N.’s sustainable development goals into its core business models and to scale up green investing into areas hit hard by the health crisis, the group said.
“Governments’ own behavior should conform to the Paris Agreement and put the SDGs at the center of their recovery effort,” the group said. “This role includes further developing best practices in the distribution and sustainable investment of public resources, as well as mobilizing private sustainable investment through fair and transparent risk sharing arrangements.”
There are six areas that the GISD considers critical to achieving global sustainability, including addressing systemic sustainability risks, improving environmental, social and governance data and scoring, globally conforming disclosure requirements, strengthening corporate governance, enhancing public-private sector partnerships, and developing sustainable finance products and infrastructure.
The group specifically recommends making sustainability reporting a requirement for both financial and non-financial institutions. The report said that insufficient data has hindered the growth of sustainable finance in many markets, and that requiring reporting would lead to faster development, in addition to better identifying risks.
The quality and consistency of ESG data is often lacking information, making it difficult to compare reports between companies over time. In addition, the financial sector in general requires forward-looking data, but most ESG data is backward-looking, so investors don’t have the best information on hand to be able to meet ESG goals, the paper said.
Accordingly, the GISD recommended that regulators focus on metric harmonization and transparency, saying that with “transparency, market forces will facilitate comparability of ESG scores and promote greater competition on analytical merits.”
The GISD said that the U.N.’s sustainable development goals can only be met through green investing, and that the conditions created by the pandemic have presented an opportunity to accelerate sustainable financing.
“Sustainable finance is critical to achieving the SDGs. This was already the case before the global COVID-19 crisis, and it is even more so now,” the GISD said. “The trillions currently being deployed in the pandemic recovery effort are a unique opportunity to unleash this potential at scale.”