In search of a global ESG risk and reporting framework

Environmental, social and governance (ESG) investing is gaining momentum across major economies, with a growing range of ESG products.

As awareness of climate change rises, investors are aligning portfolios to support sustainability, with more than 80% of investors planning to increase ESG allocations in the next two years. Moreover, as ESG investment demand rises, financial institutions, including development banks, face the dual challenge of identifying associated risks while simultaneously seizing opportunities to drive sustainability through project financing and facilitating private funding for climate-related initiatives.

Banks require clear, standardised rating and reporting criteria to support sustainable projects and manage financial risks, while having access to a unified framework and real-time data to assess exposure to physical and transition risks. Next-generation technology aims to transform and streamline data collection and reporting to enhance ESG risk management for the next decade.