A Renewed Focus on ESG Creates More Demand for Data
Snowflake is a Business Reporter client.
Companies are accelerating ESG conversations and demanding more from their data.
This year, Europeans felt the impact of rising temperatures and experienced unusual weather events. Similarly extreme and devastating weather was seen across the globe, from flooding in Southeast Asia to heatwaves in North America. Lives were lost, property was destroyed and damage unfolded across the continents. It was a reminder that extreme weather patterns linked to human-related climate change are now affecting tourism, lifestyles and business.
With COP28 looming amid worsening planetary crises, the ESG conversation continues to intensify for many organizations worldwide, particularly those in the financial services industry, which is debating how it can do more to improve its climate response.
The financial services industry plays a key role in mitigating climate impact through green investment and financing for a secure and sustainable future. Measurement and accountability are important elements of the evolving conversation on how the world will set and meet emission targets, with adoption of ESG metrics growing and becoming more important across financial services.
Companies are using ESG data to meet regulatory reporting obligations, such as the Sustainable Financial Disclosure Regulation (SFDR), and to help them comply with new disclosure rules on sustainability investments and risks. This is vitally important as jurisdictions worldwide expand or establish new requirements, which can range from tracking Scope 1 or 2 emissions to reporting the presence of high-carbon-emitting businesses in an investment portfolio. Other metrics highlight social or governance factors, such as board representation and labor standards.
This is causing disruption, but also opening up opportunities. It is important that the finance sector use a common set of disclosures and align to ESG frameworks to understand the risks and opportunities of social and environmental issues. But while the ambition is clear, the standardization of reporting on ESG metrics is not. Embedding ESG criteria in business investment and risk management frameworks remains a huge and urgent undertaking.
Financial organizations are experiencing many ESG data challenges, from accessibility and availability to veracity and data standardization for analysis. Legacy institutions that are still grappling with outdated tools and metrics to drive financial performance will face scenarios where they are operationally and competitively disadvantaged from peers that can pivot quickly with a modern, holistic ESG technology and data strategy.
As more data becomes available, financial institutions will seek to inform their investment decisions with high-quality data for deeper insights and analysis. With the emphasis on decisive action, ESG remains a powerful use case for industry data and analytics investment, as regulations continue to evolve and companies track metrics and strive for strategic business, social and policy outcomes.
To find out how the financial services industry can be empowered to improve its ESG enterprise data strategy, and for practical examples of how firms are acquiring new ESG datasets that enable portfolio construction and other workflows, download this report.
To learn more about the Snowflake Financial Services Data Cloud, click here.
This article originally appeared in Business Reporter.
Image: iStock id1153260336
