Unlocking the full potential of sustainable finance
Environmental, social and governance (ESG) investing has grown steadily in recent years, with ESG ratings, indices and other financial products proliferating to meet demand. Governments and regulators now need to urgently work together to improve the data used for ESG investing.
The 2020 edition of the OECD Business and Finance Outlook focuses on sustainable and resilient finance, in particular the ESG factors that are rapidly becoming a part of mainstream finance. It evaluates current ESG practices, and identifies priorities and actions to better align investments with sustainable, long-term value – especially the need for more consistent, comparable and available data on ESG performance.
The COVID-19 pandemic has further highlighted the urgent need to consider resilience in finance, both in the financial system itself and in the role played by capital and investors in making economic and social systems more dynamic and able to withstand external shocks.
ESG investing has been spurred by shifts in demand from across the finance ecosystem, driven by both the search for better long-term financial value and a pursuit of better alignment with values.
This report provides an overview of concepts and assessments, then conducts quantitative analysis to shed light on both the progress and challenges with respect to the current state of ESG investing.
The extent to which environmental (E) pillar scoring and investing reflect the environmental impact, carbon footprint and resource use of ESG investments is critical to enable market participants to make informed decisions relating to a low carbon transition.
This report assesses the landscape of criteria and measurement within the E pillar of ESG investing to better understand the extent to which E scores reflect outputs and to understand the impact of climate change to businesses. In doing this, the report examines whether E scoring and reporting effectively serve markets and investors that are using ESG investing in part as a tool to make portfolios more resilient to physical and climate transition risks.
