BlackRock MD: Fintech can plug data gaps in green finance

Asset managers struggling with reporting and analysing ESG-relevant data

by | July 13, 2021 | bobsguide

Fintechs could be critical in tackling the “number one” problem in green investing by developing technologies that can better report and analyse green data, according to BlackRock managing director, head of banks and digital channels, Joe Parkin.

As the momentum for green initiatives in finance gathers pace, the common hurdle has been an inability by asset management firms to decide on what constitutes green or sustainable. Last week, the EU released their strategy for financing the transition to a sustainable economy, which included outlining an updated ESG taxonomy with the aim of providing greater clarity to investors.

But Parkin said at Fintech Week London 2021 that a lack of adequate data was still the major hurdle.

“They [companies and investors] simply don’t have the data to understand where they are today and then to plot how they’re going to get to where they need to get to. The whole industry has a huge way to come in terms of data,” he said.

Julianne Sloane, co-founder of Nossa Data said in a separate panel at Fintech Week London 2021 that firms are similarly struggling to report their climate data, further draining efforts to meet climate goals.

“Right now, it takes a tonne of time for organisations to report on these different topics, whether it’s fuel usage, water usage or carbon emissions. That takes a huge amount of their resources, and when they’re spending resources reporting, they’re not spending resources on improving.

“If we can make it easier for firms to report it actually opens up scope for organisations to improve on those metrics,” she added.

Simon Cureton, CEO of Funding Options said this was an opportunity for fintechs to step forward and become part of the solution to green financing challenges.

“It’s incumbent on fintechs where we have these unique capabilities to help to try and facilitate something that is more beneficial overall,” he said.

Looking ahead, Parkin said the ultimate challenge for fintechs and finance more widely was to be able to condense down the complex data on ESG into a simple, clear message for the end-investor.

“The big challenge, which is a massive challenge and an opportunity, is how we take the stuff that goes on within investment committees, within rating agencies and all the data, and we connect that to the end-consumer.

“If we can do that, I think we can take [advantage of] that grassroots, bottom-up demand that exists,” he added.

 

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