Corporate Sustainability Data Challenge

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Corporate Sustainability Data Challenge
© Federico Beccari

Investors and asset managers are concerned about two aspects in connection with their disclosure and reporting obligations:

  1. Principle Adverse Impact Indicators to be reported next year (SFDR)
  2. Sustainability data from investee companies (CSRD)

Currently these two crucial projects run on different tracks and different timelines also. The SFDR deadline is mid-2022 but sustainability data will not be available to the extent needed by asset managers and investors in mid-2022 but rather in 2023 and 2024. This represents a substantial data challenge for financial market participants.

Speakers and delegates at the 4th Sustainable Investor Summit 2021 in Frankfurt on 29 September and in Vienna on 14 October shared the view that the lack of “real” and “reported” data from investee companies is creating a risk of under- or overvaluation of companies by analysts. The share of “estimated” ESG data was quoted to be approximately 30-40 percent. Communication of material sustainability data in the form of ad-hoc announcements and filings is also key.

Sustainability Reporting and the decision which framework to use and how to manage the growing demand from ESG analysts, ESG data providers and ESG rating agencies was among the topics discussed at the C.I.R.A. Annual Conference in Vienna on 13 October, 2021.

CEOs, investor relations managers, analysts, investors, service providers and representatives of the stock exchange discussed key topics. The need for action and steps to move towards net zero targets was shared by all but the consideration of technical complexities during the transition period was also highlighted by industrial companies.

The development of large-scale industrial processes for new technologies (hydrogen and others) need time and resources. Creating real impact and demonstrating the progress during the transition period will be key for companies.

It was also pointed out that the banking system and the financial services sector is transforming sustainability to a large group of companies in the wider economy by linking financing costs and loan agreements to sustainability data and targets. In Austria alone the number of companies sovered by CSRD would be more than 1.900 compared to a few hundred reporting sustainability data previously.

 

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