ESG reporting frameworks
Today the landscape of sustainable funds classified with article 8 and 9 of SFDR is vast and disorganized. The managers of these funds complain about the lack of accurate information about the assets on their portfolio. This is such a big problem since they have to report the emissions caused by the assets they own.
For this reason, ESG experts are working to make a standard template that will facilitate the comparison between different companies, allowing investors to make better data-driven decisions.
However, at the moment there is massive chaos in the ESG world.
Each fund or ESG rating company have different parameters to measure the decarbonization and there are often omitted controversial data on CO2 emissions.
This uncertain situation is assumed to improve when the Regulatory Technical Standards for the disclosure of sustainable products will be applied and aligned with EU Taxonomy. However, we have to wait until January 2023 for this to come true. Meanwhile, managers of investment funds cannot accurately inform their investors because of the lack of data, causing a high risk of greenwashing.
To avoid risks of greenwashing we need more transparency showing how companies integrate sustainability in their activities and products, we need to verify the ESG preferences of the clients, and, most importantly, we need accurate data to measure and compare companies’ impact.
Only with a science based framework can the investors make the right decisions.
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