Investors could soon have access to two free, centralised repositories of sustainability data following the announcement by a leading biodiversity standards setter that it is mulling the creation of a publicly accessible knowledge store.
The plan was announced as heads of state, bankers and environmentalists gathered in Paris to discuss ways of making the global financial system more responsive to sustainability needs. Among the topics discussed was the establishment of the Net Zero Data Public Utility (NZDPU) store of climate-change and mitigation data before COP28, which is due to be held in the United Arab Emirates later this year.
At the Paris Summit for a New Global Financial Pact, the Taskforce for Nature-related Financial Disclosures (TFND) said it was mulling its own biodiversity-focused version of the NZDPU.
TFND chair David Craig said the plan was in the early stages of development and that it was needed because access to nature-related data needed to be made easier, reports from the even stated. He was reported to have said that directing capital towards nature-related projects was made difficult by a lack of data and reliable metrics.
New Frontier
Biodiversity is regarded by many as the next frontier for ESG data firms, as financial institutions seek to understand the nature-based risks to investments and companies, and also the impacts that their investments are having on the natural world. Data providers including ISS ESG, Qotingo, ICE and Clarity AI have recently launched tools that help investors quantify such risks and impacts.
The TNFD’s latest proposal appears to build on a Nature Public Utility Scoping Study it launched in March to address the biodiversity data challenge.
“Data accessibility is a major limiting factor for the advancement of nature-related data, as there are often strict licensing restrictions in place, particularly for commercial use,” it wrote at the time. “For example, some emerging tools are not readily available to non-technical users, thereby limiting access, like the mean species abundance (MSA) indicator. There is also an added complication for non-technical users trying to combine data in derivative products for measuring and reporting.”
The United Nations Global Compact, the overarching code for global sustainability efforts, states that one of its goals is to ensure all stakeholders have free access to the data needed to tackle climate and social ills. The European Union incorporated the same aim in its Green Deal, which frames the broad intentions of the bloc’s ESG regulations.
Free Access
A number of free-data initiatives have already emerged among commercial data providers. Notably in December 2021, ESG Book – the sustainable data business of financial services company Arabesque – was created in collaboration with leading banks and financial institutions, including SBC, Deutsche Bank and The International Finance Corporation. It launched with data available on 9,000 companies.
The NZDPU is likely to be the biggest repository of free data. The project is part of the Climate Data Steering Committee (CDSC), which was formed in 2022 with French president Emanuel Macron at its helm with Michael Bloomberg in his capacity as UN Special Envoy for Climate Ambition and Solutions. CDSC was created from the Glasgow Finance Alliance for Net Zero (GFANZ).
The data trove “would be an open, free, and centralized data repository that would allow all stakeholders to easily access key climate transition-related data, commitments, and progress of businesses and financial institutions toward those commitments.
“By providing freely available data capturing the breadth and depth of emissions and target reporting, the NZDPU provides a powerful feedback mechanism for financial institutions, companies, and governments.”
Technology specialists including Google Public Sector have been assigned to build the NZDPU and initially it will feature net-zero targets, standardised scope 1-3 greenhouse gas emissions data and carbon credit data.
Also at the Paris gathering, which was headed by Macron, the TNFD said that it would publish a framework for nature-related risk management and disclosure in September, which it said would get the ball rolling on building a consensus on standards for reporting on nature-related topics.
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