Sustainable Finance Live commenced on Tuesday morning in a hybrid format, combining in-person and online participation. Leaders in the field engaged in discussions surrounding the critical issues and solutions currently shaping the sustainable finance landscape.
The keynote speeches and panel discussions contributed to the formulation of solutions for the accompanying hackathon and unconference, allowing attendees to engage in open dialogues about various ESG-related topics.
Richard Peers, founder of ResponsibleRisk and a contributing writer for Finextra, opened the fifth annual Sustainable Finance Live by outlining the main themes of the conference: data, risk, and financial instruments. This event provided a platform for fintech professionals to forge connections and discuss changes necessary for advancing sustainability in finance.
The conference was structured into three components: Lean Back, Lean In, and Learn by Doing. “Lean Back” featured keynote addresses from leaders in sustainable finance. “Lean In” took the form of an unconference, inviting experts to explore problem statements and examine how new technologies and data science innovations could transform the industry. Finally, “Learn by Doing” focused on the hackathon, addressing common challenges encountered in sustainable fintech.
Peers illustrated risk management using the metaphor of a self-driving car, emphasizing the need for the finance industry to move beyond historical analyses. He explained the importance of proactively addressing looming crises like climate change and biodiversity loss to make informed financial decisions.
Decarbonisation has emerged as a pressing concern for fintech companies as they strive to monitor carbon emissions and energy consumption to achieve ESG objectives. However, the rise of sustainable finance has also seen an increase in greenwashing. In his keynote speech titled Is Sustainable Finance Sustainable?, Lord Christopher Holmes of the House of Lords addressed the financial sector’s struggle to bridge gaps in ESG data and mitigate greenwashing.
Holmes emphasized the need to face the future rather than dwell on past mistakes, echoing Peers’ earlier metaphor. He expressed enthusiasm for data collected from satellites and sensors, which can track supply chains and demonstrate the potential of blockchain technology. He argued for greater transparency and real-time data analysis as critical elements for the success of sustainable finance.
He noted that technology cannot fulfill its potential if data gaps persist, urging the need for rigorous data handling as fundamental to making sound financial decisions.
Holmes also highlighted innovative legislative efforts, such as The Electronic Trade Documents Bill, which he described as transformational for ESG. This bill could accelerate the transfer of trade documents from up to ten days to a mere twenty seconds. He recommended the Financial Services and Markets Bill as a vehicle for positive change within the financial services sector.
Holmes concluded by stressing the interdependence of all facets of ESG: “While the focus often leans toward the ‘E’ for Environmental, each component is equally essential and interconnected. We cannot assign the ‘G’ solely to legal experts or the ‘E’ solely to environmental advocates. To address these challenges properly, we must view ESG as ‘Existential,’ ‘Seismic,’ and ‘Global.’”
Moderating a session on the potential of open finance, open source, and APIs to address ESG information gaps was Martina Macpherson, head of ESG product management at Six Group. She drew on the points raised by Lord Holmes about open finance and data.
The panel included Mark Akerman, chief technology officer of Tandem Bank; James Lockhart-Smith, VP and head of markets at Maplecroft; and David Patterson, head of conservation intelligence at WWF. They examined how APIs can facilitate ESG data disclosure and explored the role of AI, machine learning, natural language processing, and LIDAR in data extraction. Macpherson first outlined the landscape of ESG data analytics across the investment value chain.
As regulation mandates greater transparency in investment banking and capital markets—such as the Corporate Sustainability Reporting Directive set to take effect in 2024—Macpherson noted the necessity for standardization, harmonization, and normalization of information for effective regulatory compliance.
She cautioned that a singular methodology may not adequately address the complexities of ESG data, highlighting the challenge of navigating through an overwhelming array of standards.
The panel then focused on the critical role of technology in enabling real-time information exchange within the sustainable finance sector, essential for supporting investment decision-making and addressing data gaps.
Lockhart-Smith emphasized that alleviating the “alphabet soup” of ESG requires standardizing corporate disclosures and gradually improving key performance indicators. He noted that while these efforts may not seem revolutionary, they are vital for understanding ESG profiles holistically.
He also encouraged organizations to look beyond isolated data points, advocating for the utilization of geospatial data, satellite information, and remote sensing. By incorporating unstructured data into their assessments, organizations could improve their evaluations of human and labor rights at the country level, alongside integrating legacy structured datasets for a comprehensive view of economic interactions with nature.
Lockhart-Smith remarked on the transformative nature of the TNFD process, which encourages a broader acceptance of geospatial data and remote sensing in corporate disclosures.
Akerman underscored that Tandem Bank’s sustainability relies on cumulative customer actions, stating, “It’s not easy being green,” but emphasizing their investments in solar energy and energy-efficient technologies as significant contributions.
He expressed his data-driven approach while acknowledging gaps in existing information, asserting that leveraging all available data is crucial for informed lending decisions and growth strategies.
Patterson noted the complexity of understanding biodiversity from a geospatial perspective, describing two approaches: ex-situ, which relies on satellite data, and in-situ, which involves ground-level data collection. He acknowledged the current challenges in aggregating data globally, stressing the need for both methodologies to be effectively integrated.