ARVANA SINGH: Move to standardise sustainable finance across sectors

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The challenge is to balance a one-size-fits-all approach with reporting for individual industry ambitions

There has been a move to standardise sustainable finance and sustainability-aligned frameworks, along with disclosure requirements and taxonomies. Arguably, the use of common terms and language will provide clarity and direction for organisations, investors and banking institutions.

Having said this, national legislation and regulatory factors must be adhered to, and there should be a common set of objectives and shared impact metrics to strive towards that would be relevant in the context of a just transition. Ultimately, financial institutions can play a pivotal role throughout these stages, providing advice, guidance, expertise and finance.

The most apparent common focus area? Given the outcomes and commitments made at COP26, avoiding or reducing CO²emissions is high up on most company agendas. On its own, this factor is remarkably impactful. Several companies are following suit, setting targets in relation to this performance indicator.

This approach also allows organisations to shield themselves from potential inflationary increases in conventional electricity supply, and cost savings can be allocated to other productive uses in the economy, thereby supporting growth objectives. Typically, a banking partner should conduct a materiality-mapping assessment exercise for the respective sector, drilling down to a specific client and its operations. What impact do they have from an environmental, social and governance point of view?

 

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