Quantifi, a provider of risk, analytics and trading solutions, today published the results of a recent survey conducted during a webinar, ‘Navigating ESG & Climate Change: Opportunities, challenges, and Modelling Strategies’, hosted by Quantifi and Tata Consulting Services. The guest speakers were Susan Urkevich, Head of Sustainability, Wholesale Credit & Lending at HSBC, Amitav Borkakoty, Enterprise Credit Risk Director at Lloyds Banking Group. More than 160 individuals from the financial services industry registered for the webinar and were invited to take part in the survey.
As firms navigate the evolving landscape of the ethical, social and governance implications of climate change, they are presented with opportunities and challenges. By incorporating climate change modelling into their strategies, firms can attract socially responsible investors and align their activities with global sustainability goals. However, they must also address the associated risks, such as regulatory compliance, reputation management, and exposure to climate-related financial impacts. Effective forecasting frameworks and robust due diligence processes are essential for identifying and mitigating potential climate change risks. Key findings from the survey:
- Most respondents (79%) support increased regulation as proposed by The European Commission as it could prevent “greenwashing,” provide standardised and transparent criteria for ESG ratings, and enhance the credibility and reliability of ESG data, leading to more effective funding for sustainable companies and projects.
- As financial institutions increasingly adopt Environmental, Social, and Governance (ESG) principles in their trading and risk management practices, they will encounter several challenges. Among the respondents, 36% consider the lack of standardised ESG frameworks and metrics as a primary challenge.
- With the United Nations’ ambitious 2050 carbon-neutral target in sight, businesses are compelled to rethink their strategies, placing ESG initiatives at the forefront of their agendas. The survey revealed that 30% of respondents believe ESG initiatives will lead to increased public awareness of ESG issues. This indicates a growing interest in promoting sustainable practices and ethical business conduct.
“The survey results show overwhelming support for EU regulatory proposals. These proposals should help establish global standards for international entities to systematically incorporate quantitative ESG evaluations into process and business decisions to drive long-term risk reduction and improve portfolio performance. More commonly agreed consensus metrics will also support ESG data analytics innovation and assist potential future incorporation of ESG criteria into legislative and regulatory requirements,” comments Thomas Oliver, Head of Model Validation, Quantifi.