The “Strategic use of non-financial ESG data” webinar, dedicated to the challenge of ESG data, especially non-financial ESG data, has ended. The exceptional speakers of the event were Elizabeth Lewis, Managing Director and Deputy Head of ESG at Blackstone, Federico d’Annunzio, CEO of Traent, moderated by Andrea Gori, BCG Green Global Champion. They addressed this very serious issue and central from the financial, investor, and business points of view.
The importance of ESG non-financial data
It has been empirically shown that integrating substantial ESG demands for a given company into the investment process leads to reduced risk and outsized returns. Blackstone manages money on behalf of clients, pension funds, and other institutional investors and manages their capital. Many institutional investors want to see the return on their investment, and many want to integrate ESG by engaging in climate, Net Zero, or otherwise.
“Recently, this is becoming much more regulation driven.” – says Elizabeth, also pointing to the SFDR in Europe, which is an anti-greenwashing law to help fund clients understand which funds are sustainable and not. It also led to a change in tax flows. She adds -“This is having a big impact around the world and on investors to their companies in terms of data. In the United States, too, there is a proposed law on greenwashing and a law proposed by the SEC on disclosing climate-related risks and increasing risks to businesses.”
Speaking about her experience, she also explains how it is possible to truly engage in ESG by combining the different aspects of the acronym. Blackstone has a goal for each of the three letters, particularly for diversity, decarbonization, and good governance.
Elizabeth further added: “data is critical for making decisions. We’ve gone from a much more qualitative ESG world to a much more quantitative one. While we are moving in this world, we are doing a lot to have high-quality data and useful for decisions.”
Trusted global ESG ecosystem
“We empower data integrity along the whole enterprise process and business interactions,” says Federico d’Annunzio, briefly introducing Traent‘s commitment.
There are many risks, such as fraud, greenwashing, and the publication of false data. Lack of control of so much data is problematic, and many are not transparent and not accessible. “Legal enforcement by public authorities, regulations on disclosure of sustainable finance, reporting on climate change will become mandatory,” says d’Annunzio.
Equity and credit investors are attractive to converge on common ESG goals. This is a positive chain where policymakers, investors, and corporate executives are shifting focus from ESG engagement to ESG execution and results. “The first value is trust. The entire ecosystem must rely on facts, data, which are consistent, verified and verifiable by third parts.” – explains Federico.
The blockchain was born to create coins, not to create and manage unlimited amounts of data in real-time, as in regular business interactions. D’Annunzio explains that new hybrid blockchains have been born, new web infrastructures that no longer limit commercial activities and have no environmental impact, totally protect privacy, and implementation is faster and less expensive. Furthermore, compliance with the GDPR is no longer a bottleneck, and the transparency and verifiability of data are finally guaranteed. This innovation changes the whole outlook for ESG.
D’Annunzio adds, “Now organizations can collaborate and create ESG documents with each other in real-time directly on the blockchain. Every declaration of the informative agreement becomes immutable and authentically validated by third parties. The next generation blockchain creates authentic and verifiable data, and ESG reports become verifiable by consumer users.”
This could change the dynamic of the ESG community in economic and social activities. Starting with accountability, organizations can deliver authentic ESG reports with verified data in real-time and use easier access to credit by negotiating terms. Additionally, organizations can be rewarded for their ESG achievements. Investors and regulators can also access ESG data in real-time and integrate it into their risk management framework. Inserting these ESG practices into the entire corporate ecosystem allows for the creation of value, new relationships of trust, greater transparency, and reduction of greenwashing.
“Because -” d’Annunzio said -“in the business world, it is one thing to trust one person and another to trust an entire organization. Imagine the impact ESG credibility can have on the global economy. “