Sustainable funding is a key factor in achieving the goals of sustainable development worldwide, as the implementation of ESG criteria and adaptation actions against climate change are now a top priority.
Despite the fact that sustainable financing has shown and continues to show impressive growth, this market is far from mature and the fragmented and complex regulatory framework makes it difficult to make the right decisions.
Peter Gassmann, Global Leader Strategy & and Global ESG Leader of the PwC global network, emphasized the above during his speech at the Delphi Economic Forum, noting at the same time that there are serious challenges in how to present and compare reports on issues ESG.
Mr Gassmann pointed to the danger of selective references to elements that create a distorted picture and could lead to Greenwashing. In addition, it focused on the opportunities that the use and implementation of cross-border Financial Market Infrastructures, which can act as a catalyst for growth, especially among developing countries, would bring on a global scale.
An important challenge, according to Mr. Gassmann, is the fact that the regulatory framework and the infrastructure of the financial markets are not sufficiently developed, which in turn makes potential investors face difficulties in comparing viable securities.
Directly related to the above, is the fact that there is currently no stable framework for evaluation criteria of ESG practices, resulting in inconsistencies and delays, as the relevant standards are being developed, making it difficult to make objective comparisons.
Mr Gassmann spoke in detail about the regulatory framework governing ESG reporting, and even announced changes that would ensure an international framework of rules that is functional and based on transparency.
The vision for a new, functional market
At the same time, as managing the ESG criteria and reversing the effects of climate change is a top priority, sustainable funding is key to achieving the goals.
As Mr Gassmann has pointed out, although a number of tools and resources are available to grow this market, they are not being used effectively. But if this is possible, the viability of financial markets will improve overall. In fact, if there is the necessary political will at the international level, the impact will be even greater, as – despite the impressive rise in recent years – the market is far from mature.
In addition, Mr. Gassman stressed that important issues of concern to the planet, such as the war in Ukraine, the energy crisis and the pandemic, undoubtedly accelerate the integration of the “S” and “G” factors of the ESG ecosystem. In particular, global crises highlight the need to establish strong governance structures that will be governed by values ​​of ethics and transparency, while promoting the principles of corporate governance to safeguard social cohesion.
The role of (cross-border) Financial Markets Infrastructure
Finally, Mr. Gassmann referred to the role of Financial Market Infrastructures (FMIs), which, as he stressed, are key elements of the financial system. In fact, if there is agreement among market participants on data management, this could lead to a significant increase in liquidity.
Source: Capital
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