Head of Global Sustainable Finance and ESG at IBM Consulting
According to Adam Thompson, Head of Global, Sustainable Finance and ESG at IBM Consulting, there is a short timeframe in which the world must act before we reach a disaster of global proportions.
Corporate management of ESG, the prevention of greenwashing, and the implementation of a global sustainable financial system that utilises technology to track accountability are all elements that Thompson believes are highly necessary to prevent such disasters.
As an expert in data research and ESG management, he says that 2025 is a key date that companies must aim for when bringing their sustainable policies and net-zero goals into alignment.
Managing ESG goals effectively
Thompson says that having a more transparent landscape regarding the implementation of sustainable finance and ESG will act as a catalyst for greater adoption of practices and that ESG risk ratings require more oversight of the granularity of good quality primary datasets to ensure all corporations are working towards impactful ratings and consequently investments.
“ESG risk ratings have been very diverse. In that level of granularity, it's been ranging from the 50 to 100 mark, through to 300, depending on which rating agency has been leveraged. That's going to be the next one where this secondary data source – which has been good in front or perfect for the last number of years – will change.”
Creating a homogenised strategy
“More importantly, it'll provide that holistic, quadruple bottom line that the people, planet, prosperity, and purpose lens for the consumer can be included in.”
He continues: “Some organisations talk about ESGI [Environmental Social Governance Impact] – that quadruple bottom line is intrinsic and linked to our UN SDGs. It's not just about making a return on investment over five or 10 years. It’s about having something that's regenerative, that has a positive impact on society.
“But when it comes to the industry as a whole, I think we’re at a crossroads. You have those who are really embracing sustainable finance – based on my own dialogue with institutions, this certainly happens in Europe a lot more than in the US to date.
“Potentially once we have clarity on the US Security Exchange Commission in terms of regulations, this dynamic might change. But right now, it has been regulatory driven. But what is also clear generation-wise, from a consumer spending perspective, this is also changing the trend and the focus of ESG adoption.”
Addressing strategies for the future
Thompson says that COP27 and COP15 have played a vital role in addressing the needs of the planet as we move forward, time is of the essence. “The timeline for required change is actually lower than 2025. You realise very quickly that there will be a domino effect from nature and in terms of biodiversity, degradation, water scarcity, and obviously climate change itself in terms of the temperature rises and consequently climate human migration as a result”.
He concludes: “It's fundamental to everyone's livelihood that we address this. And sustainable finance is absolutely key in playing that by channelling funds and investments in the right direction to make impactful change. But it's very clear that the runway that we all have to address this is shortening. We need to take action now for the foreseeable future.”
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