The discussion took place on the COP27 Finance Day and included panellists from FoSDA, CDP, S&P Global, London Stock Exchange Group (LSEG), Moody’s and Climate Bonds Initiative.Continue reading
FoSDA is entering its 3rd year and its mission has never been more important.Continue reading
FoSDA is pleased to announce four new members – Arabesque S-Ray, CDP, Impak and FTSE Russell – to its Data Council, pooling expertise and joining the efforts of existing members Refinitiv, S&P Global, Moody’s ESG Solutions Group and Bloomberg.Continue reading
Today, as we celebrate the anniversary of its creation, the Future of Sustainable Data Alliance (FoSDA) announces the launch of the Data Council.Continue reading
Icebreaker One, a partner of the Future of Sustainable Data Alliance (FoSDA), has published for consultation and input an open report focused on enabling secure and scalable non-financial reporting and data flows.
The report presents the scope and complexity of data sharing across markets, supply and value-chains. It also underlines challenges that create friction, inertia and inhibit action in delivering goals, including hard-programmed habits and underlying presuppositions and premises. Finally, the report also sets out solutions that can reduce friction in data-sharing and proposes levers of change that can help unlock innovation (e.g. policy and regulatory, perception shifts, behavioural changes).
The report’s intended audience includes decision-makers and their advisors who wish to understand the transformative potential of data, and how its usage can be unlocked at scale to enable it to act as a flow of evidence that informs action. While it covers ‘technology concepts’ it is not ‘about’ technology. Rather, it addresses designing the conditions for success that would enable millions of experts, practitioners and organisations to better discover, access and use the data they need to make informed decisions.
About Icebreaker One
Icebreaker One is an independent, non-partisan, global non-profit. They connect private and public sector leaders to help reduce risk and grasp the opportunity to transform the climate crisis into economic innovation.
Launched at the World Economic Forum in January 2020, the Future of Sustainable Data Alliance brings global partners together to seek to solve the question of what data investors and governments need to meet the 2030 climate targets? Founding partners include the World Economic Forum, United Nations, IIF, OMFIF, Tsinghua University, ASIFMA, GFMA, Climate Bonds Initiative, FinTech4Good, Everledger, Institute of Public and Environmental Affairs, Spatial Finance Initiative, Bank of Africa-BCME and GoImpact, with membership growing with the recent addition of Icebreaker One.
Contact details: firstname.lastname@example.org
Everledger’s Leanne Kemp and Refinitiv’s Julia Walker set out the urgent case for cross-border data flow, including to channel finance to sustainable investments.
On paper, data governance looks a bit restrictive. Like the traffic police on the information highway, perhaps? Given its importance for driving innovation across the world, an open-ended and unregulated approach to data sharing might sound more effective.
In reality, data governance is more of a traffic calming system, which aims to speed up and proliferate the circulation of information across international borders. Far from stifling progress, data governance helps to establish channels and processes that greatly stimulate the global response to critical challenges such as biodiversity and carbon management, as well as health data security and traceability. For example, since the outbreak of Covid-19, governments around the world have started to realise and admit that restrictions on cross-border data flows not only inhibit scientific and economic progress but actually cost lives.
The urgency for international data governance has grown in recent years for two seemingly conflicting reasons. Firstly, data has become indispensable for business in the digital age. Between 2018 and 2022, global mobile data traffic (about half of all internet data traffic) is expected to grow at a compound annual growth rate of 46 percent to 77.5 exabytes per month.
The technologies of the Fourth Industrial Revolution (4IR) – such as artificial intelligence, blockchain, the Internet of Things (IoT) and cloud computing – are wholly reliant on open access to data. For example, McKinsey has projected that data-driven AI has the potential to deliver additional global economic activity of around USD 13 trillion by 2030.
Meanwhile, the International Data Corporation estimates that the number of connected IoT devices will swell to 41.6 billion by 2025, generating 79.4 zettabytes (ZB) of data. By way of comparison, the entire global datasphere was just 33 ZBs in 2018.
Although the call for data has amplified, countries have become more resistant to cross border data sharing. Research by the OECD in 2018 found that an estimated 200-plus data regulations were being implemented worldwide. The overall level of restrictiveness has doubled over the past decade, according to the European Centre for International Political Economy’s Data Restrictiveness Index. This is partly a misperception that protectionism is better for developing local markets. However, the restrictions are also due to legitimate fears around enforcement, sovereignty, privacy and security of data.
The disruption of the Covid-19 pandemic has swelled the perception of supply chain vulnerability and over-reliance on the rest of the world for data, goods, services, and materials. Countries and firms are looking to become more self-sufficient. However, international trade will remain a critical driver of GDP and business growth. Creating effective policies on cross-border data flows must be a priority for all countries and regions that wish to thrive in the post COVID-19 era.
The World Economic Forum (WEF), alongside a global community of like-minded organisations, has launched a Roadmap for Cross-Border Data Flows, with the aim of “identifying best-practice policies that both promote innovation in data-intensive technologies and enable data collaboration at regional and international levels.”
The WEF sets out six steps to help governments develop robust domestic policies that retain a balance between the benefits and risks of data flows:
- Allow data to flow by default
- Establish a level of data protection
- Prioritise cybersecurity
- Hardwire accountability between nations
- Prioritise connectivity, technical interoperability, data portability and data provenance
- Future-proof the policy environment
The roadmap aims to help countries to streamline requirements to facilitate cross-border data flows and create mechanisms to reduce regulatory overload. Doing so will capitalise on economies of scale, particularly at a regional level, and allow governments to create a friendly policy environment for indigenous and international investment. Investment breeds opportunity, and those countries with a burgeoning technology sector can start to maximise these companies’ opportunities on a global scale, enabling them to develop cutting-edge technologies with global impact as well as experiencing potential knock-on economic and societal benefits.
Close the sustainability data gap
The WEF is not alone in taking a lead on international data governance. The Future of Sustainable Data Alliance – spearheaded by Refinitiv and the WEF – campaigns for data collaboration as a means of channeling more finance to sustainable investments. By helping capital markets to gain a better grasp of sustainability considerations, the alliance of firms such as Everledger, IIF, The University of Oxford, The Climate Bonds Initiative and many others, is working to reduce the current misspend on “inefficient and even environmentally or socially damaging projects and assets.”
The Alliance has three goals:
- To articulate the future data requirements investors and governments need to accurately integrate Environmental, Social and Governance (ESG) data into decision making processes.
- To highlight new technology and data sets that can support a smooth transition to sustainable development.
- To determine data needs and how to satisfy them for investors wanting to take greater account of SDG-related risks and impacts.
Refinitiv’s Global Head of Government & Industry Affairs, Sustainable Finance, Julia Walker recently warned against losing sight of sustainability amid the chaos of the pandemic. “Despite many governments and regulatory bodies developing policies focused on sustainable investment as part of their strategies to meet the UN’s Sustainable Development Goals (SDGs), no country is as yet on track to meet the Goals, and the Covid-19 crisis has moved us even more off track,” she said.
“Therefore, reliable and actionable ESG data is now a critical requirement for effective sustainable investment. Industry needs to identify gaps in existing data sets, plan for future data needs and pinpoint what it is that the investment community needs in order to make better and more impactful investment decisions at scale.”
Mainstreaming climate and environmental data into capital markets in decision-useful form requires standardisation. With greater support and collaboration for alignment and innovation, investors will have the guidance and tools needed to tailor their investments and fulfil their fiduciary duties through better quality and more widely available data on sustainability and performance; superior data analytics through the advent of artificial intelligence and machine learning; and more informed decisions relating to strategic resilience.
Transparency in action
The Data Alliance recognises the value of data transparency in global supply chains, especially for scope 3 emissions. Data provenance (i.e. capturing a secure record of the lifetime history of an object) can become a powerful factor, as it enables transparency throughout the value chain.
The diamond industry provides a telling example of how international data sharing can make a real difference on the ground, both environmentally and socially. Diamonds were traditionally exchanged along opaque supply chains, where data was commonly lost, manipulated, suppressed or destroyed. More recently, mining companies, manufacturers and retailers have taken steps to become more transparent about the provenance of their diamonds, in response to customer demand for green and conflict-free stones, as well as international regulatory efforts.
Blockchain has emerged as a secure technology for flowing data in an interoperable way, based on its ability to document the origin and complete historical record of any type of data in an immutable record. Every instance of data changing hands or going through any type of operation is traceable, unlike the traditional paper trails or even Web 2.0 technologies, which have proven to be vulnerable to malefactors.
Powered by blockchain, transparency becomes a two-way street. Information flows securely upstream, carrying insights about the origin and characteristics of the diamond or gemstone. Eventually, the customer at the head of the chain can make their purchase on the basis of increased knowledge and a more thorough understanding of the provenance and value of the piece. An example of this is the project carried out by Everledger for Chow Tai Fook (one of the world’s largest jewelry retailers) and GIA (the foremost gemological institute in the world, creators of the 4Cs standard for diamond classification), which increased consumer confidence on the jewelry they are purchasing.
Information can also be sent downstream to help all stakeholders make more informed decisions. The overall impact is increased transparency in a complex supply chain, which results in closer adherence to the aims of the UN SDGs, whether related to gender equality, decent work and economic growth, or responsible consumption and production.
In one scenario, any restriction to this data flow could result in a regression of mining and manufacturing standards, which would in turn impact communities, biodiversity and carbon management. At the head of the chain, retailers could face a commercial loss, if consumers lose trust in the provenance of a potential purchase.
Data is therefore a precious asset in its own right, with a financial, human and environmental value. The right governance can help ensure this value is shared for the benefit of all nations.
Spatial finance offers socio-economic and environmental insights that have the potential to enhance data transparency in the financial system. How could this help create a smoother transition to sustainable development?
- Spatial finance, the integration of geospatial data into financial practice, can help increase transparency within the financial system for practitioners and data providers alike.
- Sustainability related risks can be better managed through the use of geospatial data. It can also assist in the analysis and management of other factors affecting risk and return in different asset classes.
- A primary objective of The Future of Sustainable Data Alliance, an industry partnership co-founded with Refinitiv, is employing new data and technology to support a just transition to sustainable development.
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Today, more geospatial data is being collected than ever before. New generations of small satellites are orbiting our planet, taking high resolution images of every point on Earth, enabling us to observe planetary-scale change on a daily basis. ‘Spatial finance’ is the integration of this geospatial data and analysis into financial theory and practice.
When combined with artificial intelligence (AI) to automatically scan and interpret this vast amount of visual data on the cloud, the true capabilities of spatial finance become apparent.
Combining Earth observation and remote sensing with AI can transform the availability of information in our financial system, and to change how risks, opportunities, and impacts are measured and managed by financial institutions and civil society.
By incorporating geospatial data into financial decision making, spatial finance provides an opportunity to enhance transparency within the financial system for both practitioners and data providers.
Watch: In Conversation with Sherry Madera, Chief of Industry and Government Affairs — #WEF20 Davos
This last decade has seen an unprecedented level of investment and innovation in the space sector. This has been driven by satellite hardware miniaturization, standardization, and reduced launch costs.
Start-ups and entrepreneurs have leveraged these trends to launch more satellites and, in doing so, are collecting huge volumes of data from anywhere on the planet, multiple times per day. Planet, for example, uses satellite imagery to provide users with real-time geospatial insights to support sustainable agriculture, emergency response or natural resource protection.
New sensors are becoming available all the time. Spire employs data to track maritime vessels and airplanes, and understand localized weather patterns, while GHGSat uses its platforms to measure asset-level greenhouse gas emissions. Meanwhile, satellite data collected by ICEYE is used to monitor economic activity day and night.
Advances in data science and AI mean that these huge datasets can now be processed and analyzed in a much more effective way.
Satellite Earth observation data and its derived geospatial services are highly complementary to corporate (non-)financial disclosures, providing insights across a wide range of economic, social, and environmental topics. The data can equally furnish insights where no information is disclosed at all.
What are the advantages of spatial finance?
Spatial finance allows financial markets to more accurately measure and manage sustainability-related risks, as well as enhance a vast range of other factors that affect risk and return in different asset classes.
These technologies will enable governments, regulators, companies, investors, and civil society to tackle a wide variety of global challenges in new ways:
- Asset owners will be able to test portfolios against their investment beliefs
- Asset managers will be empowered to actively engage with investees in a timelier manner
- Corporates will be able to verify internal data collection, compare performance with peers, and understand biodiversity risks and impacts within their supply chains
- Regulators will be able to more accurately assess environmental and social systemic risks within the financial system
- Policymakers will be able to track progress against the Paris agreement
Future of Sustainable Data Alliance
One of the main objectives of the Future of Sustainable Data Alliance, an industry partnership co-founded by Refinitiv, is to highlight new technology and datasets that can support a just transition to sustainable development.
Geospatial data and technologies provide relevant insights across all economic sectors with a direct or indirect link to the physical economy, and are therefore a key focus for the Alliance.
Spatial finance allows us to illuminate sustainability risks and opportunities as never before, qualify new categories of risks, and extend measurement to places not previously possible.
Its practical applications include:
- Biodiversity: Applications range from overlaying corporate operations with protected areas and protected species ranges, to the monitoring of land use impacts driven by corporate operations and supply chains
- Climate: Applications include asset-level physical climate risk exposure, and direct assessments of facility emissions and outputs indicating transition risk exposure
- Emerging markets: Historical satellite data can be used to generate environmental risk profiles underpinning credit or insurance products where no other historical data is available
Satellite data is widely adopted in sectors such as agriculture, extractive industries, logistics and infrastructure, and is increasingly embraced by civil society and the sustainable development ecosystem.
Adoption across the financial sector, however, is lagging.
The Spatial Finance Initiative was set up to mainstream geospatial capabilities enabled into financial decision-making globally, and is proud to be a partner in the Alliance to accelerate reliable, actionable ESG data and related technologies needed to deliver a truly sustainable financial system.
Gaps in ESG data are among the factors influencing the adoption of sustainable behavior and financing. How will the recently launched Future of Sustainable Data Alliance (FoSDA) help to understand what data investors and governments need to meet the requirements of regulators, citizens and market demand for sustainable investments and portfolios to 2030?
- Reliable ESG data is a critical requirement for effective sustainable investment and for achieving the UN’s 17 Sustainable Development Goals.
- At January’s World Economic Forum in Davos, Refinitiv was one of the founding partners behind the launch of FoSDA.
- FoSDA aims to foster co-operation between regulators and the industry, empowering all organizations to help to understand what data investors and governments need to meet the requirements of regulators, citizens and market demand for sustainable investments and portfolios to 2030.
As the COVID-19 impact is felt around the world, we cannot lose focus on the urgent need to protect our planet and address the many social and environmental challenges faced by all.
What we invest in and how we invest needs to change, and we urgently need to plot the path to get there by understanding the data needs of the future and urgently making progress to make it available.
Significant growth in sustainable investment is evident towards our 2030 goals, but our efforts, nonetheless, remain in the starting blocks.
Despite many governments and regulatory bodies developing policies focused on sustainable investment as part of their strategies to meet the SDGs, no country is as yet on track to meet the 2030 deadline, and the COVID-19 crisis has moved us even more off track.
Therefore, reliable ESG data – which can help guide the allocation of trillions of dollars of investment capital – is now a critical requirement for effective sustainable investment.
Watch: Future of Sustainable Data Alliance: David Marsh
ESG data: evolution in action
The need for standardized, accessible data to guide the financial industry — as well as governments, central banks and regulators — on how best to incorporate ESG risk into decision-making processes has grown in recent years.
There has been much progress in disclosure standards, driven in particular by the Task Force on Climate-Related Financial Disclosures. Despite this, the available data still needs more depth, breadth and connectivity.
Significant work is also needed to address fundamental data requirements in climate risk assessment, water, waste, and biodiversity for environmental risk assessments.
To successfully ensure that the world shifts towards a sustainable future, ESG data — the bedrock of sustainable financial markets — needs to continue its evolution. To become truly valuable, data needs to be complete, coherent, and comparable.
There is an urgent need for the industry to identify gaps in existing data sets, plan for future data needs and pinpoint what it is that the investment community needs in order to make better and more impactful investment decisions at scale.
Future of Sustainable Data Alliance
Against this backdrop, Refinitiv spearheaded the formation of a new multi-member alliance. In January 2020, we launched the Future of Sustainable Data Alliance with the World Economic Forum in Davos.
The other founding partners are the World Economic Forum, United Nations, IIF, ASIFMA, Tsinghua University, OMFIF, GFMA, Climate Bonds Initiative, FinTech4good, Everledger, Oxford University, The Spatial Finance Initiative, Catapult, Finance for Biodiversity, and GoImpact.
This newly formed collaborative body of global influencers will focus on the fact that investors actually need to confidently invest more in sustainable economic activities.It will also aim to accurately inform and increase capital raising and allocation at the scale needed to tackle global societies’ environmental and social challenges.
FoSDA has the following key goals:
- To articulate the future data requirements that investors and governments need to accurately integrate ESG data into decision-making processes.
- To highlight new technology and data sets, in a post-COVID-19 world, there is even more need to channel stimulus that can support a just transition to sustainable development.
- To determine data needs and how to satisfy them for investors who want to take greater account of SDG-related risks and impacts.
The Future of Sustainable Data Alliance will lead the way in delivering decision-ready data to the investment community, and in so doing, empower all stakeholders to make better, more sustainable decisions.
FoSDA members will strive to foster an evolving mindset; co-operate with regulators and the industry; and work to empower all organizations to meet our shared goals of economic stability and inclusive growth.
As we step into a new decade, it is this form of deep collaboration that will ensure that we have the right mix of data, tools and human expertise necessary for all stakeholders to make a positive and informed contribution to the fulfillment of the UN’s SDGs.
Tell us about your company and how you can help FoSDA achieve its sustainable data goals this year.