NGFS: Enhancing market transparency in green and transition finance

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© Appolinary Kalashnikova

NGFS publishes a report on enhancing market transparency in green and transition finance

The NGFS released the report “Enhancing Market Transparency in Green and Transition Finance”, which leverages the experiences of NGFS members and observers to shed light on the state of play and key challenges surrounding market transparency issues.

Ravi Menon, Chair of the NGFS and Managing Director of the Monetary Authority of Singapore: “Transparency is key to mobilising capital for green and transition projects. This report highlights the key elements for achieving transparency in green finance, chief of which is a globally consistent disclosure standard. This is why the work by the International Sustainability Standards Board on a global sustainability reporting standard is critically important. The NGFS is keen to work with like-minded players in enhancing market transparency to harness the power of financial markets to help achieve a net zero world.”

The report sets out some key considerations relevant to policymakers:

  • Enhance market transparency about issuers’ and investors’ green and transition objectives. Taxonomies and climate transition frameworks are most effective when they are tied to clear objectives and science-based net zero targets.
  • Facilitate comparability and interoperability of taxonomies, frameworks, and principles. A common understanding of criteria, targets and methodologies is critical to avoid divergences in assessments in green external reviews.
  • Accelerate efforts on disclosure and reporting. Enhanced disclosure and reporting, based on global disclosure standards with industry-specific metrics, will form the basis for consistent, comparable and reliable climate data, transition plans and investment products.

Dr Sabine Mauderer, Vice-Chair of the NGFS and Member of the Executive Board of the Deutsche Bundesbank: “Global warming and geopolitics make it ever more important to cut our dependence on fossil fuels. To provide the necessary financing for the transition, investors need clear and internationally comparable criteria to assess the environmental benefits and costs of their investments. In a nutshell, we need harmonized taxonomies and transition frameworks as well as global baseline disclosure standards.

This report aims to feed into international discussions on improving compatibility of approaches to identify, verify and align investments to sustainability goals.

 

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