Bloomberg Insights: Advancing the ESG Data Ecosystem
Overview:
A recent Bloomberg report discusses the critical need for decision-useful ESG data and the emerging standards designed to address data quality and coverage issues. This advancement is crucial for investors navigating the evolving landscape of sustainable finance.
The Need for Decision-useful ESG Data
As climate-related risks and policy changes continue to impact companies globally, the demand for high-quality ESG data is growing. Investors require reliable data to make informed decisions, but they often face challenges with data coverage and quality.
Emerging Standards
To address these challenges, the International Sustainability Standards Board (ISSB) introduced the IFRS Sustainability Disclosure Standards in June 2023. These standards aim to enhance investor-company dialogue about climate-related reporting and improve the overall quality of ESG data.
Regulatory Impact in Europe
In Europe, the Corporate Sustainability Reporting Directive (CSRD) requires large companies to report on their climate impact. However, aligning these reporting frameworks with investor expectations remains a significant challenge. The European Commission emphasizes the importance of corporate sustainability information for evaluating a company's sustainability performance.
The Role of Auditors
Auditors play a crucial role in assessing ESG-related risks and ensuring accurate disclosures. Their involvement is essential for developing a robust ESG data ecosystem that meets regulatory requirements and investor needs.
Advancing the ESG data ecosystem is vital for supporting sustainable finance and enabling investors to make well-informed decisions. By improving data quality and coverage, and aligning reporting frameworks with investor expectations, the industry can better address climate-related risks and drive sustainable growth.
Read the full report here:
