In the end, it all comes down to the G of ESG.
“Here’s a wonderfully rigorous new study on governance and climate change in the financial services sector from the World Benchmarking Alliance.”
In the end, it all comes down to the G of ESG.
By Alison Taylor, May 4, 2023
Here’s a wonderfully rigorous new study on governance and climate change in the financial services sector from the World Benchmarking Alliance. Thanks to pal Andrea Webster for alerting me!
As the report itself says, there is nothing brand new here. We already know that the sector’s perfomance is unimpressive. But this is the evidence we need.
And, more importantly, it gets to the point. If we want change, we need collaboration, regulation, more board diversity and oversight, well designed incentives, and better disclosure.
The last point on private equity and venture capital is especially fascinating and where I’m hoping to do a lot more work, just as soon as my book is done!
Here are the report’s key conclusions, and the full link is below:
1. The whole financial system scores poorly against expectations on governance and climate. There are no notable overall outliers. However, there are financial institutions that have made progress in areas which others can learn from.
2. The whole financial system scores poorly on its approach to fossil fuels. This clearly remains a contentious issue. We urge stronger multi-stakeholder collaboration to find pathways forward and enable an environment of greater transparency, not less.
3. Institutions with gender-balanced boards outperform across climate indicators compared to those institutions with boards that are not gender balanced.
4. Institutions that link executive remuneration to sustainability outperform across all climate indicators.
5. Stronger regulations lead to greater transparency and therefore better performance on climate indicators.
6. Many of the asset owners that are regarded as important influencers in the financial system remain opaque and score poorly on climate indicators.
7. Financial institutions that typically fall outside the scope of mainstream regulations, such as private equity and venture capital, are opaque and score poorly on climate indicators despite being on the frontier of financing climate solutions.
https://lnkd.in/e83nHNVC
#climatechange #diversity #venturecapital #environment #sustainability #collaboration #privateequity